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Full text of "[Records and briefs of the United States Circuit Court of Appeals for the Ninth Circuit]"

F 2302 



San Francisco 

Law Library 

NO. /JLCJLJLe.Z 



EXTRACT FROM BY-LAWS 

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of such Trustees or Executive Committee. 



MLCOX A CO 



No. 9746 



®mteb States; -?%^9 

Circuit Court of appeals 

Jfor tfje Minti) Circuit* 



UNITED STATES OF AMERICA, 

Appellant, 

vs. 

J, LESLIE MORRIS COMPANY, INC., a cor- 
poration, 

Appellee. 



Stamftript nf fterarb 



Upon Appeal from the District Court of the 

United States for the Southern District 

of California, Central Division. 



fAULKOW 



PARKER PRINTING COMPANY. 545 SANSOME STREET- SAN FRANCISCO 80-8-2S-4I 



No. 9746 



Wtnittb States 

Circuit Court of Appeals 

Jfor tfre Jlintf) Circuit. 



UNITED STATES OF AMERICA, 

Appellant, 

vs. 

J. LESLIE MORRIS COMPANY, INC., a cor- 
poration, 

Appellee. 



Ulrmrtrript iff Sterorb 



Upon Appeal from the District Court of the 

United States for the Southern District 

of California, Central Division. 



PARKER PRINTING COMPANY. S45 SANSOME STREET. SAN FRANCISCO mott i« 41 



INDEX 

: (Jerk's Note: When deemed likely to be of an important nature. 
:rroi> or doubtful matters appearing in the original certified record ar< 
printed literal!* in italic: and. likewise, cancelled matter appearing i>- 
iiie original certified record is printed and cancelled herein according!? 
When possible, an omission from the text is indicated by printing ii> 
italic the two words between which the omission seems to occur. j 

Page 

Answer to Complaint 20 

Appeal : 

Designation of Appellant of Contents of 
Record on (Circuit Court of Appeals) ... 256 

Designation of Appellee of Contents of 
Record on (Circuit Court of Appeals) ... 259 

Designation of Contents of Record on (Dis- 
trict Court ) 65 

Notice of 62 

Order Extending Time to File Record and 
Docket Cause on (two) 63-64 

Order for Transmittal of Original Exhibits 
on 64 

Statement of Points on 255 

Attorneys, Names and Addresses of 1 

Certificate of Clerk 67 

Complaint 2 

Conclusions of Law 59 

Conclusions of the Court 32 



ii United States of America vs. 

Index Page 
Decision 32 

Designation of Appellant of Contents of Record 
on Appeal (Circuit Court of Appeals) 256 

Designation of Appellee of Contents of Record 
on Appeal (Circuit Court of Appeals) 259 

Designation of Contents of Record on Appeal 
(District Court) 65 

Findings of Fact and Conclusions of Law 36 

Judgment 61 

Names and Addresses of Attorneys 1 

Notice of Appeal 62 

Order Extending Time to File Record and 
Docket Cause on Appeal (two) 63-64 

Order for Judgment 31 

Order for Transmittal of Original Exhibits to 
Circuit Court of Appeals 64 

Statement of Points on Appeal 255 

Substitution of Attorneys 30 

Testimony 68 

Exhibits for Government: 

A — Four invoices (1934) J. Leslie. 
Morris Co., Inc 189 

B — Articles of Incorporation of J. 

Leslie Morris Co., Inc 201 

C— Tax Return (1933) Capital Stock 

Tax 204 



J. Leslie Morris Co., Inc. "i 

Index Page 

Exhibits for Government (Cont.) : 

D— Franchise Tax Return (1932) 

California 206 

E— Franchise Tax Return (1933) 

California 207 

F— Franchise Tax Return (1934) 

California 208 

Exhibits for plaintiff : 

1-32 — Photographs of Plaintiff's Proc- 
ess with descriptive legend [Set 
out in separate volume] 

43 — Group of invoices for purchase of 

connecting rods 126 

45 — Price list, Moroloy (August 1, 

1932 ) 129 

47 — Price list, Moroloy (September 24, 

1934) 134 

49— Catalog (1933), Moroloy 136 

50 — Photograph of empty carton used 

for shipping rods 146 

55 — Balance sheet December 31, 1933... 154 

61— Letters dated March 25, 1938 and 
April 7, 1939 to J. Leslie Morris 
& Co., Inc. from Guy T. Helver- 
ing 231 

62— Capital Stock Tax Return (1934) 235 

63— Capital Stock Tax Return (1935) 236 



*▼ United States of America vs. 

Index Page 

Exhibits for plaintiff (Cont.) : 

64 — Franchise Stock Tax Return 

(1935)' 238 

Witnesses for plaintiff: 
Morris, J. Leslie 

—direct 77 

— recalled, direct 161 

— cross 162 

— redirect 224 

— recross 239 

— recalled, direct 250 

— cross 253 

Pattin, Harry W. 

— direct 148 

— cross 159 



NAMES AND ADDRESSES OF ATTORNEYS 

For Appellant: 

WM. FLEET PALMER, Esq., 

United States Attorney, 
E. H. MITCHELL, Esq., 

Assistant United States Attorney, 
ARMOND MONROE JEWELL, Esq., 

Assistant United States Attorney, 

600 U. S. Post Office & Courthouse Bldg., 

Los Angeles, California. 

For Appellee: 

DARIUS F. JOHNSON, Esq., 

1124 Van Nuys Building, 

Los Angeles, California. 
MESSRS. MESERVE, MUMPER AND 

HUGHES, 
SHIRLEY E. MESERVE, Esq., 
E. A. CRARY, Esq., 

555 South Flower St., Suite 615, 

Los Angeles, California, [1*] 



*Page numbering appearing at foot of page of original certified 
Transcript of Record. 



2 United States of America vs. 

In the District Court of the United States 

In and for the Southern District of California 

Central Division 

No. 433-J Civil 

J. LESLIE MORRIS COMPANY, INC., 

Plaintiff, 

vs. 

UNITED STATES OF AMERICA, 

Defendant. 

COMPLAINT 

FOR RECOVERY OF INTERNAL REVENUE 

TAX AND INTEREST 

Comes now the plaintiff in the above entitled 
action and for cause of action against the defend- 
ant, complains and alleges: 

I. 

That the plaintiff, J. Leslie Morris Company, 
Inc., at all times herein mentioned was, and now is, 
a corporation duly organized and existing under 
and by virtue of the laws of the State of California, 
with its principal place of business located in the 
City of Los Angeles, County of Los Angeles, State 
of California. Said principal place of business is 
located within the Sixth Collection District of Cali- 
fornia. 

II. 

That one Nat Rogan was on, to-wit : July 30, 1935, 
and prior thereto, and thence continuously up to 



J. Leslie Morris Co., Inc. 3 

and including the date of the filing of this com- 
plaint, collector of Internal Revenue of the United 
States for the Sixth District of California. 

III. 

That the tax and interest involved herein arises 
under the laws of the United States providing for 
internal revenue and more specifically under Sec- 
tion 606 (c) of the Internal Revenue Act of 1932. 
That all of the taxes and interest sued for herein 
were assessed and imposed in respect of sales by 
plaintiff of [2] rebabbitted automobile connecting 
rods during the period from June 21, 1922, to 
August 1, 1935. All of said connecting rods were 
originally manufactured by persons, firms or cor- 
porations other than plaintiff, and before their 
acquisition by plaintiff, had been used as operating 
parts for automobile motors, and by reason of such 
use the babbitt metal lining constituting a part of 
said connecting rods had become worn, chipped, 
roughened and otherwise impaired. 

IV. 

That none of the articles sold by this plaintiff, on 
which the tax sued for herein was assessed and 
paid, were manufactured or produced or imported 
by said plaintiff; that plaintiff is, and at all times 
herein mentioned was, engaged in the business of 
repairing and rebabbitting worn and damaged auto- 
mobile connecting rods; that the process used was 
only a repair and did not change the identity of 



4 United States of America vs. 

the parts in any manner, as trade-names and model 
numbers appearing thereon were not altered or re- 
moved; that all repaired connecting rods were 
packed in cartons clearly marked to indicate that 
the parts had only been rebabbitted and repaired. 

V. 

That on or about the 15th day of November, 1935, 
the defendant, acting by and through the Bureau 
of Internal Revenue of the Treasury Department, 
and the Collector of Internal Revenue for the Sixth 
District of California, determined that there were 
due from plaintiff, pursuant to the provisions of 
Section 606(c) of the Internal Revenue Act of 
1932, certain excise taxes together with interest 
thereon, upon the sale by plaintiff or rebabbitted 
automobile connecting rods, in the sum of $6,800.59 ; 
and pursuant to such determination the defendant 
assessed said taxes and interest, or caused the same 
to be assessed against the plaintiff, and the Collector 
of Internal Revenue for the Sixth District of [3] 
California made demand upon plaintiff for the pay- 
ment of said taxes and interest. 

VI. 

That pursuant to the aforesaid demand the plain- 
tiff paid to the Collector of Internal Revenue of 
the United States for the Sixth District of Cali- 
fornia, the sum of $500.00, on or about the 1st day 
of September, 1937. 



J. Leslie Morris Co., Inc. 5 

VII. 

That Section 608(c) of the Internal Revenue Act 
of 1932, does not levy a tax on the sale of rebab- 
bitted and repaired automobile connecting rods, and 
therefore, the assessment heretofore alleged is il- 
legal and void. Accordingly, on or about the 18th 
day of November, 1937, in accordance with the 
provisions of the Internal Revenue Act of 1932, the 
plaintiff duly filed with the Collector of Internal 
Revenue of the United States for the Sixth District 
of California, at his office in the City of Los An- 
geles, State of California, a claim for refund of said 
$500.00, representing tax and interest paid under 
provisions of Section 606(c) of the Internal Rev- 
enue Act of 1932; that said claim for refund was 
duly filed on Official Form Number 843; that in 
said claim for refund plaintiff alleged and set forth 
as the grounds for the refund claimed, as follows, 
to wit : 

" Commissioner of Internal Revenue, 

Washington, D. C. 

Sir: 

Re: J. Leslie Morris Co., Inc. 
1361 S. Hope Street, 
Los Angeles, Calif. 
Under account number Nov. 36 Misc 2027-1 
your office assessed $6800.59 against the above 
taxpayer to cover the manufacturer's excise tax 
on the sale of rebabbitted automobile connect- 
ing rods during the period from June 21, 1932, 



United States of America vs. 

to August 1, 1935. On September 1, 1937, this 
taxpayer made a payment of $500.00 on said 
assessment. 

The above payment of $500.00 represents a 
payment by this taxpayer on the liability as 
established by the [4] commissioner's office. 
This tax has not been passed on to the pur- 
chaser in any manner, either by separate bill- 
ing or by a raise in prices. 

The J. Leslie Morris Co., Inc., is engaged in 
the business of rebabbitting worn automobile 
connecting rods. The process is only a repair 
and does not alter the identity of the rod as 
established by the manufacturer. The finished 
article is clearly marked to show that the repair 
work was done by this taxpayer. The finished 
article is packed in a carton marked ' re-bab- 
bitted' and bearing the statement 'Our famous 
spinning process used in repairing this connect- 
ing rod'. This company is well known to the 
automobile trade as a rebabbitter of rods. They 
have never manufactured a new rod, and could 
not do so if they wished for the reason that 
they have not the equipment which would be 
necessary to make a new rod. 

It is contended that since the rebabbitted 
connecting rods do not lose their original iden- 
tities and since the rebabbitting is only a repair 
process, that no tax should attach upon the sale 
thereof. This contention is based on the rulings 
pertaining to the rebuilding of storage bat- 



/. Leslie Morris Co., Inc. 7 

teries, automobile engines and upon the follow- 
ing rulings and decisions: 

S. T. 458 C. B. June 1925, p. 253. This ruling 
held that where the manufacturer of automo- 
bile truck chassis, in the sale of his product, 
took in part payment trucks of his own make, 
some of which were repaired by replacing un- 
serviceable parts by new parts, that no tax 
would attach to the sale thereof under section 
600 (3) of the Internal Revenue Act of 1924, 
but that a tax was due on the sale of the new 
parts used in the repairing of the old trucks. 
Some used chassis were dismantled and usable 
parts were used in the manufacture of truck 
chassis, together with other salvaged parts and 
new parts, producing a [5] chassis which had 
no previous existence. Only in the latter in- 
stance would tax attach to the sale. 

This policy was continued with reference to 
used motorcycles by a ruling published in 1932. 
(S. T. 514, C. B. December 1932, p. 471) : 

' "Where manufacturer A accepts as a 
trade-in a used motorcycle made by manufac- 
turer B, the resale by manufacturer A is 
not taxable because it is not a sale by the 
manufacturer, producer or importer. How- 
ever, in the event that used motorcycles are 
so materially changed before being resold as 
to lose their original identity, the resale of 
such machine is subject to the tax imposed by 



8 United States of America vs. 

section 606 (b) of the Internal Revenue Act 
of 1932." ' 

"In a case relating to retreading of automo- 
bile tires, published in 1933, the Bureau of In- 
ternal Revenue once more applied the same 
rule. 
(S. T. 648, C. B. June 1933, p. 384) : 

' "The retreading of old tires by resurfac- 
ing or replacing of the actual tread down to 
the tread line, without altering the side walls 
or destroying the original identity of the tire, 
does not constitute the manufacture of a tax- 
able article/' ' 

"This rule was extended by J. C. Skinner 
vs. United States to exclude all retreaded tires 
from this tax. In this case the court said that 
retreaded tires were known to the automobile 
trade for many years prior to the enactment 
of the Internal Revenue Act of 1932 and that 
if Congress had intended that the tax should 
attach to the sale of retreaded tires that such 
provision would have been put in the act, and 
that since such provision was not put in the 
act it appears that Congress intended for the 
tax to attach only to the sale of new tires. 

"This rule was continued by the Federal 
Court in Montieth Brothers Company vs. 
United States rendered October 5, 1936 and in 
Hempy-Cooper Manufacturing Company vs. 
United States. Both these cases related to the 
taxability of rebabbitted connecting rods and 



J. Leslie Morris Co., Inc. 9 

rewound armatures. The court found in favor 
of the plaintiff in both of these cases, and 
adopted findings which left no doubt as to sale 
of rebabbitted connecting rods being free of 
tax. [6] 

" Attention is called to a letter to the Na- 
tional Standard Parts Association, Detroit, 
Mich, over the signature of Mr. D. S. Bliss 
dated June 30, 1936, in which it was held that 
no tax attached to the sale or exchange of re- 
built automobile engines, even though many 
new parts w T ere used. Apparently it was pre- 
sumed that all the parts had been purchased 
tax paid. In this letter Mr. Bliss mentioned that 
' repaired connecting rods' were used in the 
rebuilt engine under consideration. 

"In view of the foregoing rulings and court 
decisions it is impossible to reconcile the action 
of the Bureau of Internal Revenue in holding 
that the sale of rebabbitted connecting rods is 
subject to tax. The intent of the above author- 
ities is very clear and leaves no doubt as to the 
law applicable in the instant case. Accordingly, 
taxpayer claims that the tax referred to here- 
tofore was unjustly and illegally collected and 
should be refunded. 

"J. LESLIE MORRIS COM-^ 
PANY, INC., 
By J. LESLIE MORRIS, 

President" 



10 "United States of America vs. 

VIII. 

That on or about the 25th day of March, 1938, 
the Commissioner of Internal Revenue of the 
United States rejected and disallowed plaintiff's 
said claim for refund of $500.00. 

IX. 

That the tax and interest covered by this suit 
has not been included in the price of the article 
with respect to which it was imposed, or collected 
from the vendee or vendees. [7] 

For a Second, Several and Separate Cause of Ac- 
tion, Plaintiff Complains of Defendant and Al- 
leges : 

I. 
Plaintiff, by reference, hereby makes Paragraphs 
I, II, III, IV, V, and IX of its first cause of action 
a part of this cause of action, as if the same were 
fully set forth herein. 

II. 

That pursuant to the aforesaid demand the plain- 
tiff paid to the Collector of Internal Revenue of the 
United States for the Sixth District of California, 
the sum of $500.00, on or about the 22nd day of 
April, 1938. 

III. 

That Section 606 (c) of the Internal Revenue Act 
of 1932, does not levy a tax on the sale of rebab- 
bitted and repaired automobile connecting rods, and 
therefore, the assessment heretofore alleged is ille- 
gal and void. 



J. Leslie Morris Co., Inc. 11 

Accordingly, on or about the 7th day of June, 
1938, in accordance with the provisions of the In- 
ternal Revenue Act of 1932, the plaintiff duly filed 
with the Collector of Internal Revenue of the 
United States for the Sixth District of California, 
at his office in the City of Los Angeles, State of 
California, a claim for refund of said $500.00 repre- 
senting tax and interest paid under provisions of 
Section 606 (c) of the Internal Revenue Act of 
1932; that said claim for refund was duly filed on 
Official Form number 843; that in said claim for 
refund plaintiff alleged and set forth as the grounds 
for the refund claimed, as follows, to wit : 

" Commissioner of Internal Revenue 

Washington, D. C. 

Sir: 

Re : J. Leslie Morris Co., Inc. 

1361 S. Hope Street, 

Los Angeles, Calif. 

" Under account number Nov. 36 Misc. 2027-1 
your office assessed $6800.59 against the above 
taxpayer to [8] cover the manufacturer's excise 
tax on the sale of rebabbitted automobile con- 
necting rods during the period from June 21, 
1932, to August 1, 1935. On April 21, 1938, this 
taxpayer made a payment of $500.00 on said 
assessment. 

"The above payment of $500.00 represents a 
payment by this taxpayer on the liability as 
established by the commissioner's office. This 
tax has not been passed on to the purchaser in 



12 United States of America vs. 

any manner, either by separate billing or by a 
raise in prices. 

"The J. Leslie Morris Co., Inc., is engaged 
in the business of rebabbitting worn automo- 
bile connecting rods. The process is only a re- 
pair and does not alter the identity of the rod 
as established by the manufacturer. The fin- 
ished article is clearly marked to show that 
the repair work was done by this taxpayer. 
The finished article is packed in carton 
marked "re-babbitted" and bearing the state- 
ment "Our famous spinning process used in 
repairing this connecting rod." This company 
is well known to the automobile trade as a re- 
babbitter of rods. They have never manufac- 
tured a new rod, and could not do so if they 
wished for the reason that they have not the 
equipment which would be necessary to make 
a new rod. 

"It is contended that since the rebabbittecl 
connecting rods do not lose their original iden- 
tities and since the rebabbitting is only a re- 
pair process, that no tax should attach upon 
the sale thereof. This contention is based on 
the rulings pertaining to the rebuilding of stor- 
age batteries, automobile engines and upon the 
following rulings and decisions : 

"S. T. 458 C. B. June 1925, p. 253. This rul- 
ing held that where the manufacturer of auto- 
mobile truck chassis, [9] in the sale of his prod- 



J. Leslie Morris Co., Inc. 13 

uct, took in part payment trucks of his own 
make, some of which were repaired by replac- 
ing unserviceable parts by new parts, that no 
tax would attach to the sale thereof under sec- 
tion 600 (3) of the Internal Revenue Act of 
1924, but that a tax was due on the sale of the 
new parts used in the repairing of the old 
trucks. Some used chassis were dismantled and 
usable parts were used in the manufacture of 
truck chassis, together with other salvaged 
parts and new parts, producing a chassis which 
had no previous existence. Only in the latter 
instance would tax attach to the sale. 

"This policy was continued with reference to 
used motorcycles by a ruling published in 1932. 

(S. T. 514, C.B. December 1932, p. 471) : 

" ' Where manufacturer A accepts as a 
trade-in a used motorcycle made by manufac- 
turer B, the resale by manufacturer A is not 
taxable because it is not a sale by the man- 
ufacturer, producer or importer. However, 
in the event that used motorcycles are so ma- 
terially changed before being resold as to 
lose their original identity, the resale of such 
machine is subject to the tax imposed by sec- 
tion 606 (b) of the Internal Revenue Act of 
1932/ " 

"In a case relating to retreading of automo- 
bile tires, published in 1933, the Bureau of In- 
ternal Revenue once more applied the same rule. 



14 United States of America vs. 

(S. T. 648, C. B. June 1933, p. 384) : 

" 'The retreading of old tires by resurfac- 
ing or replacing of the actual tread down to 
the tread line, without altering the side walls 
or destroying the original identity of the tire, 
does not constitute the manufacture of a tax- 
able article.' " 

"This rule was extended by J. C. Skinner vs. 
United States to exclude all retreaded tires from 
this tax. In this case the court said that re- 
treaded tires were known to the automobile 
trade for many years prior to the enactment of 
the Internal Revenue Act of 1932 and that if 
Congress had intended that the tax should at- 
tach to the sale of retreaded tires that such pro- 
vision would have been put in the act, [10] and 
that since such provision was not put in the act 
it appears that Congress intended for the tax 
to attach only to the sale of new tires. 

"This rule was continued by the Federal 
Court in Montieth Brothers Company vs. 
United States rendered October 5, 1936 and in 
Hempy-Cooper Manufacturing Company vs. 
United States. Both these cases related to the 
taxability of rebabbitted connecting rods and 
rewound armatures. The court found in favor 
of the plaintiff in both of these cases, and adopt- 
ed findings which left no doubt as to sale of 
rebabbitted connecting rods being free of tax. 

"Attention is called to a letter to the Na- 
tional Standard Parts Association, Detroit, 
Mich, over the signature of Mr. D. S. Bliss in 



J. Leslie Morris Co., Inc. 15 

which it was held that no tax attached to the 
sale or exchange of rebuilt automobile engines, 
even though many new parts were used. Appar- 
ently it was presumed that all the parts had 
been purchased tax paid. In this letter Mr. Bliss 
mentioned that " repaired connecting rods" 
were used in the rebuilt engine under consider- 
ation. 

"In view of the foregoing rulings and court 
decisions it is impossible to reconcile the ac- 
tion of the Bureau of Internal Revenue in 
holding that the sale of rebabbitted connect- 
ing rods is subject to tax. The intent of the 
above authorities is very clear and leaves no 
doubt as to the law applicable in the instant 
case. Accordingly, taxpayer claims that the tax 
referred to heretofore was unjustly and ille- 
gally collected and should be refunded. 
"J. LESLIE MORRIS 
COMPANY, INC., 
"By J. LESLIE MORRIS, 

"President." [11] 

IV. 

That on or about the 7th day of April, 1939, the 
Commissioner of Internal Revenue of the United 
States rejected and disallowed plaintiff's said claim 
for refund of $500.00. 



16 United States of America vs. 

For a Third, Several and Separate Cause of Ac- 
tion, Plaintiff Complains of Defendant and Al- 
leges : 

I. 
Plaintiff, by reference, hereby makes Paragraphs 
I, II, III, IV, V, and IX of its first cause of ac- 
tion a part of this cause of action, as if the same 
were fully set forth herein. 

II. 

That pursuant to the aforesaid demand the plain- 
tiff paid to the Collector of Internal Revenue of 
the United States for the Sixth District of Cali- 
fornia, the sum of $500.00, on or about the 13th 
day of August, 1938. 

III. 

That Section 606 (c) of the Internal Revenue Act 
of 1932, does not levy a tax on the sale of rebab- 
bitted and repaired automobile connecting rods, and 
therefore, the assessment heretofore alleged is ille- 
gal and void. Accordingly, on or about the 20th 
day of August, 1938, in accordance with the provi- 
sions of the Internal Revenue Act of 1932, the plain- 
tiff duly filed with the Collector of Internal Reve- 
nue of the United States for the Sixth District of 
California, at his office in the City of Los Angeles, 
State of California, a claim for refund of said 
$500.00, representing tax and interest paid under 
provisions of Section 606 (c) of the Internal Reve- 
nue Act of 1932; that said claim was duly filed on 
refund plaintiff alleged and set forth as the grounds 
Official form number 843; that in said claim for 
for the refund claimed, as follows, to wit: [12] 



J. Leslie Morris Co., Inc. 17 

"Commissioner of Internal Revenue 
Washington, D. C. 

Re: J. Leslie Morris Co., Inc. 
1361 S. Hope Street, 
Los Angeles, California 
Sir: 

"Under account number Nov. 26 Misc. 2027-1 
your office assessed $6,800.59 against the above 
taxpayer to cover the manufacturer's excise tax 
on the sale of rebabbitted automobile connect- 
ing rods sold during the period from June 21, 
1932 to August 1, 1935. On August 9, 1938, this 
taxpayer made a payment of $500.00 on said as- 
sessment. 

"The J. Leslie Morris Company is engaged in 
the business of rebabbitting worn automobile 
connecting rods. The process is only a repair 
and does not alter the identity of the rod as 
established by the manufacturer. The finished 
article is clearly marked to show that the repair 
work was done by this taxpayer and is packed 
in a carton marked " Re-babbitted ' ' and bearing 
the statement "Our Famous spinning process 
used in repairing this connecting rod." This 
company is well known to the automobile trade 
as a re-babbitter of connecting rods. They have 
never manufactured a new rod, and could not 
do so for the reason that they have not the 
necessary equipment. 

"It is contended that since the re-babbitted 
connecting rods do not lose their original iden- 
tity and since the re-babbitting is only a repair, 



18 United States of America vs. 

that no tax should attach upon the sale there- 
of. Our contention is based on the actual facts 
and the following Treasury decisions and Court 
Decisions : 

"S. T. 458 C. B. June 1925, p. 253. This rul- 
ing held that where the manufacturer of auto- 
mobile truck chassis, repaired used trucks by 
replacing worn parts with new parts, that no 
tax attached to the sale thereof under [13] sec- 
tion 606 (3) of the Internal Revenue Act of 
1924, but that a tax would attach to the sale of 
the new parts used therein. 

"This policy was continued with reference to 
the sale of used motorcycles by a ruling pub- 
lished in 1932. S. T. 514, C. B. December 1932, 
P. 471. In this instance the Bureau held: 
" ' Where manufacturer A accepts as a 
trade-in a used motorcycle made by manufac- 
turer B, the resale by manufacturer A is not 
a sale by the manufacturer, producer or im- 
porter. However, in the event that used mo- 
torcycles are so materially changed before be- 
ing resold as to lose their original identity, 
the resale of such machine is subject to the 
tax imposed by section 606 (b) of the Inter- 
nal Revenue Act of 1932.' " 

"In a case relating to retreading of automo- 
bile tires, published in 1933, the Bureau of In- 
ternal Revenue once more applied the same 
rule, S. T. 648, C. B. June, 1933, p. 384. 

" 'The retreading of old tires by resurfac- 
ing or replacing of the actual tread down to 



J. Leslie Morris Co., Inc. 19 

the tread line, without altering the side walls 
or destroying the original identity of the tire, 
does not constitute the manufacture of a tax- 
able article.' " 

"The above rule was followed by the United 
States District Court in J. C. Skinner v. United 
States, 8 Federal Supplement 999. In this case 
the Court said that retreaded tires were known 
to the automobile trade for many years prior to 
the enactment of the Internal Revenue Act of 
1932 and that if Congress had intended that the 
tax should attach to the sale of retreaded tires, 
that such provision would have been put in the 
act, and that since such provision was not put 
in the act it appears that Congress intended 
for the tax to attach only to the sale of new 
tires. 

"This rule was continued by the Federal Dis- 
trict Court in Monteith Brothers Company v. 
United States, Mempy-Cooper Manufacturing 
Company v. United States and Pioneer Motor 
Bearing Company v. United States. [14] 

"In view of the foregoing decisions and the 
fact that the rebabbitting process does not alter 
the original identity of the connecting rods, it 
is claimed that no tax is due upon the sale 
thereof, and that the $500.00 payment referred 
to above was unjustly and illegally collected and 
should be refunded. 

"J. LESLIE MORRIS 
COMPANY, INC. 
By J. LESLIE MORRIS, 

"President." 



20 United States of America vs. 

IV. 

That on or about the 7th day of April, 1939, the 
Commissioner of Internal Revenue of the United 
States rejected and disallowed plaintiff's said claim 
for refund of $500.00. 

Wherefore, plaintiff prays for judgment against 
defendant in the sum of $1,500.00, together with 
interest thereon, from the dates of the respective 
payments, at the rate of six per cent per annum, 
and for such other and further relief as the court 
deems fitting and proper. 

DARIUS F. JOHNSON, 
Attorney for Plaintiff. 1124 Van Nuys Building, 
Los Angeles, California. [15] 

(Verification.) 

[Endorsed]: Filed Jun 15, 1939. R. S. Zimmer- 
man, Clerk. By L. B. Figg, Deputy Clerk. [16] 



[Title of District Court and Cause.] 

ANSWER 

Comes now the defendant in the above entitled 
action and in answer to the Complaint, admits, de- 
nies and alleges as follows : 

I. 

The allegations of Paragraph I of the Complaint 
are admitted. 

II. 

The allegations of Paragraph II of the Complaint 
are admitted. 



J. Leslie Morris Co., Inc. 21 

III. 

Answering the allegations of Paragraph III of 
the Complaint, defendant admits that the tax in 
controversy arises under Section 606 (c) of the 
Revenue Act of 1932 and that said taxes were as- 
sessed and imposed in respect of automobile con- 
necting rods sold by plaintiff during the period 
between June 21, 1932, and July 31, 1935, inclu- 
sive, but it is denied that said sales were of " re- 
babbitted automobile connecting rods 77 . It is denied 
that all or any part of said connecting rods sold by 
plaintiff were manufactured by any person or [17] 
persons other than plaintiff. In this connection, it 
is alleged that the connecting rods sold by plain- 
tiff, or the greater part of them, were connecting 
rods manufactured and produced by it, within the 
meaning of the Revenue Statute, from a combina- 
tion of new materials and usable materials sal- 
vaged from discarded, used or worn out connect- 
ing rods, or scrap acquired by plaintiff from job- 
bers and junk dealers; that such used connecting 
rods as were salvaged and used by the plaintiff 
in the manufacture of connecting rods sold by it 
were discarded and junked by their former owners 
because they were no longer regarded by such own- 
ers as serviceable or fit for the purpose to which 
they were originally put and adapted, and that the 
remainder of plaintiff's sales of connecting rods con- 
sisted of newly manufactured rods purchased by 
plaintiff from outside sources in instances where 
used f orgings were not yet available, due to the re- 



22 United States of America vs. 

cent advent of particular types or models of rods, 
and that said newly manufactured rods were sold 
by plaintiff as its own product and were commin- 
gled with the connecting rods produced and manu- 
factured by plaintiff from a combination of new 
and used materials. All other allegations of Para- 
graph III are denied. 

IV. 

Answering Paragraph IV of the Complaint, it is 
admitted that none of the articles sold by plaintiff 
were imported by it. All other allegations of said 
Paragraph IV of Complaint are denied. It is fur- 
ther alleged in this connection that plaintiff at all 
times material to the issues in this action was en- 
gaged chiefly in the business of making and produc- 
ing automobile connecting rods and selling them 
under its own trade name therefor throughout the 
United States, Canada, New Zealand and Australia 
to wholesalers, known also as jobbers, for replace- 
ment purposes in connection with the repairing of 
automobile motors by mechanics and garage men. 

[18] 
V. 

Answering Paragraph V of the Complaint, de- 
fendant admits that the Commissioner of Internal 
Revenue determined that taxes in the aggregate sum 
of $5,243.49 were due by plaintiff under the provi- 
sions of Section 606 of the Revenue Act of 1932, in 
addition to the original taxes paid by plaintiff in the 
amounts shown in the monthly excise returns filed 
by plaintiff with respect to the cash portion of each 
and every sale of automobile connecting rods made 



J. Leslie Morris Co., Inc. 23 

by it during the taxable period. In this connection, 
it is alleged that said sum of $5,243.49, together 
with interest thereon of $1,164.42 and penalties of 
$392,68, or an aggregate sum of $6,800.59, was duly 
assessed on the November, 1935 assessment list of 
the Commissioner of Internal Revenue and that de- 
mand for payment of said tax was duly made. That 
said additional assessment of $5,243.49 was made on 
the basis that the allowance granted by plaintiff for 
the serviceable article taken in trade on its sales 
should be included as part of the sales price in com- 
puting the tax. All other allegations of Paragraph V 
of the Complaint are denied. 

VI. 

The allegations of Paragraph VI are admitted. 
In further answer to the allegations of Paragraph 
VI, defendant alleges that plaintiff has paid on 
said assessment of $6,800.59 only the sum of $1,500.00 
and is still indebted to the United States in the re- 
maining amount of $5,300.59, plus interest. 

VII. 

Answering the allegations of Paragraph VII of 
the Complaint, defendant denies the assessment in 
question is illegal or void. It is admitted that plain- 
tiff filed a claim for the refund of the sum of $500.00 
paid on September 1, 1937, on account of the total 
addi- [19] tional assessment of $6,800.59 and that 
said claim was filed on Treasury Department Form 
843 and recited in support thereof the grounds which 
are quoted in Paragraph VII of the Complaint. It 



24 United States of America vs. 

is denied that said grounds correctly set forth the 
facts or are legally sufficient to constitute a claim 
for refund. It is alleged that the remaining allega- 
tions of Paragraph VII are argumentative and re- 
quire no answer. In further answer to Paragraph 
VII of the Complaint, it is alleged that plaintiff's 
purported claim for refund is legally insufficient as 
a basis for the recovery of said sum of $500.00 be- 
cause said claim for refund was filed prior to the 
payment of the entire assessment of $6,800.59 and 
that the Court is without jurisdiction to grant re- 
covery herein for the reason that plaintiff has failed 
to comply in said claim, or otherwise, with the pro- 
visions of Section 621 (d) of the Revenue Act of 
1932 and the Regulations promulgated pursuant 
thereto. 

VIII. 
Paragraph VIII of the Complaint is admitted. 

IX. 

Paragraph IX of the Complaint is denied. 

In answer to the plaintiff's alleged second and 
separate cause of action, defendant admits, denies 
and alleges as follows : 

I. 

Answering Paragraph I of said alleged second 
cause of action, defendant, by reference, hereby 
adopts the answers made to Paragraphs I, II, III, 
IV, V and IX of plaintiff's alleged first cause of 
action with the same force and effect as if said an- 
swering paragraphs were again fully set forth. [20] 



«7. Leslie Morris Co., Inc. 25 

II. 

Paragraph II of the alleged second cause of ac- 
tion is admitted. Further answering Paragraph II 
of the second cause of action, defendant alleges that 
plaintiff has paid on said assessment of $6,800.59 
only the total sum of $1,500.00 and is still indebted 
to the United States in the remaining amount of 
$5,300.59, plus interest. 

III. 

Answering the allegations of Paragraph III of 
the alleged second cause of action, defendant de- 
nies that the assessment in question is illegal or 
void. It is admitted that plaintiff filed a claim for 
refund of the sum of $500.00 paid on April 22, 1938, 
on account of the total additional assessment of $6,- 
800.59. That said claim was filed on Treasury De- 
partment Form 843 and recited in its support the 
grounds which are quoted in Paragraph III of said 
alleged second cause of action of the Company, but 
it is denied that said grounds correctly set forth 
the facts or are legally sufficient. It is alleged that 
the remaining allegations of said Paragraph III of 
the alleged second cause of action of the Complaint 
are argumentative and require no answer. In fur- 
ther answer to the allegations of Paragraph III of 
the alleged second cause of action, defendant al- 
leges that plaintiff's said claim for refund is le- 
gally insufficient as a basis for the recovery of said 
$500.00 because the same was filed prior to the pay- 
ment of the entire assessment of $6,800.59 and that 
the Court is without jurisdiction to grant any re- 



26 United States of America vs. 

covery herein because plaintiff has failed to com- 
ply in said claim, or otherwise, with the provisions 
of Section 621(d) of the Revenue Act of 1932 and 
the Regulations promulgated pursuant thereto. 

[21] 
IV. 

The allegations of Paragraph IV of the alleged 
second cause of action of the Complaint are admit- 
ted. 

In answer to plaintiff's alleged third and separate 
cause of action, defendant admits, denies and al- 
leges as follows: 

I. 

In answer to Paragraph I of plaintiff's alleged 
third cause of action, the defendant, by reference, 
here adopts the answer made to Paragraphs I, II, 
III, IV, V and IX of the plaintiff's first alleged 
cause of action with the same force and effect as if 
said answering paragraphs were again fully set 
forth. 

II. 

The allegations of Paragraph II of plaintiff's 
alleged third cause of action are admitted. In fur- 
ther answer to said Paragraph II of plaintiff's al- 
leged third cause of action, defendant alleges that 
the plaintiff paid on said assessment of $6,800.59 
only the total sum of $1,500.00 and is still indebted 
to the United States in the remaining amount of 
$5,300.59, plus interest. 

III. 

Answering the allegations of Paragraph III of 
plaintiff's alleged third cause of action, defendant 



/. Leslie Morris Co., Inc. 27 

denies that the assessment in question is illegal or 
void. It is admitted that plaintiff filed a claim for 
the refund of $500.00 paid August 13, 1938, on ac- 
count of the total assessment of $6,800.59 ; that said 
claim was filed on Treasury Department Form 843 
and recited in support thereof the grounds which 
are quoted in Paragraph III of said alleged third 

[22] 
cause of action of plaintiff's Complaint. It is alleged 
that the remaining allegations of Paragraph III 
are argumentative and require no answer. In fur- 
ther answer to the allegations of said Paragraph 
III, defendant alleges that plaintiff's purported 
claim for refund is legally insufficient as a basis 
for the recovery of said $500.00 because the same 
was filed prior to the payment of the entire assess- 
ment of $6,800.59. Further answering, the defend- 
ant alleges that the said claim for refund is also 
insufficient because of the failure to allege therein 
that plaintiff has not included the tax in the price 
of the articles with respect to which it was imposed, 
or that plaintiff has not collected the amount of the 
tax from the vendees, or that it has repaid the amount 
of the tax to the ultimate purchasers of the arti- 
cles, or has secured the written consent of such ulti- 
mate purchasers to the allowance of the credit or 
refund as required by Section 621(d) of the Reve- 
nue Act of 1932 and Article 71 of Treasury Regu- 
lations 46. It is alleged that plaintiff has wholly 
failed to comply with the requirements of said 
Article 71 of Treasury Regulations 46 and Section 
621(d) of the Revenue Act of 1932 in its claim for 



28 United States of America vs. 

refund, or otherwise, and for that reason the Court 
is without jurisdiction to grant plaintiff any recov- 
ery herein and plaintiff's alleged third cause of ac- 
tion should be dismissed. 

IV. 

The allegations of Paragraph IV of the alleged 
third cause of action are admitted. 

By way of further answer to plaintiff's Com- 
plaint and as a counter-claim, defendant alleges as 
follows: [23] 

I. 

That the defendant is a corporate body politic. 

II. 

That the United States Commissioner of Internal 
Revenue on his November, 1935 Miscellaneous tax 
assessment list, page 2027, line 1, determined and 
assessed an additional tax and interest in the ag- 
gregate amount of $6,800.59 against the plaintiff 
on account and in respect of sales made by plain- 
tiff of automobile connecting rods during the period 
from June 21, 1932, to and including July 31, 1935. 

III. 

That on September 1, 1937, plaintiff paid the sum 
of $500.00 on account of the said additional assess- 
ment. Thereafter plaintiff paid the sum of $500.00 
on April 22, 1938, and $500.00 on August 13, 1938, 
and there remains due and unpaid to the defendant 
from the plaintiff on account of said additional 
assessment the sum of $5,300.59, together with in- 
terest as provided by law. 



J. Leslie Morris Co., Inc. 29 

IV. 

That although the Collector of Internal Revenue 
for the Sixth Collection District of California has, 
on behalf of the defendant herein, demanded that 
plaintiff pay the entire amount of said additional 
assessment, plaintiff has failed, neglected and re- 
fused to pay the sum of $5,300.59, plus interest 
thereon, and is indebted to the defendant in said 
amount, for which defendant here asserts a coun- 
ter-claim without, however, waiving the defendant's 
right to rely upon any of the defenses above set 
forth in this Answer. [24] 

Wherefore, the defendant, having fully answered 
the plaintiff's Complaint, prays judgment as fol- 
lows: 

I. 

That the plaintiff take nothing by this action. 

II. 

That the defendant have Judgment against the 
plaintiff herein in the amount of $5,300.59, plus in- 
terest according to law, together with defendant's 
costs expended. 

BEN HARRISON, E. H. 

United States Attorney. 
E. H. MITCHELL, E. H. 

Assistant U. S. Attorney. 
EUGENE HARPOLE, 
Special Attorney, Bureau of Internal Revenue, At- 
torneys for Defendant. 

[Endorsed]: Filed Oct. 16, 1939. R. S. Zimmer- 
man, Clerk. By L. B. Figg, Deputy Clerk. 

[25] 



30 United States of America vs. 

[Title of District Court and Cause.] 

SUBSTITUTION OP ATTORNEYS 

I, hereby substitute Darius F. Johnson and Me- 
serve, Mumper and Hughes, as my attorneys in the 
above entitled matter, in the place and stead of 
Darius F. Johnson. 

Dated : This 23 day of April, 1940. 

J. LESLIE MORRIS 
COMPANY, INC. 
By J. LESLIE MORRIS, 

President. 
I, hereby agree to the substitution of Darius F. 
Johnson and Meserve, Mumper and Hughes, as the 
attorneys for the plaintiff, J. Leslie Morris Com- 
pany, Inc., in the above entitled matter, in my place 
and stead. 

Dated : This 23 day of April, 1940. 

DARIUS F. JOHNSON. 

[27] 

We hereby accept the above substitution of Dar- 
ius F. Johnson, and Meserve, Mumper and Hughes, 
as attorneys for the plaintiff, J. Leslie Morris Com- 
pany, Inc., in the above entitled matter, in the place 
and stead of Darius F. Johnson. 

Dated : This 30th day of April, 1940. 

MESERVE, MUMPER and 
HUGHES, 
By SHIRLEY E. MESERVE. 



J. Leslie Morris Co., Inc. 31 

Received copy of the within Substitution of Attys 
this 6 day of May, 1940. 

BEN HARRISON, 

U. S. Attorney. 
By ARMOND MONROE JEWELL, 
Asst. U. S. Atty. Attorney for Deft. 

[Endorsed]: Filed May 6, 1940. R. S. Zimmer- 
man, Clerk. By C. E. Hollister, Deputy Clerk. [28] 



At a stated term, to wit: The February Term 
A. D. 1940 of the District Court of the United 
States of America, within and for the Central Di- 
vision of the Southern District of California, held 
at the Court Room thereof, in the City of Los An- 
geles on Wednesday the 24th day of July in the 
year of our Lord one thousand nine hundred and 
forty. 

Present: The Honorable: Paul J. McCormick, 
District Judge. 

No. 433-M Civil 

J. LESLIE MORRIS COMPANY, INC. 

Plaintiff, 

vs. 

UNITED STATES OF AMERICA, 

Defendant. 

This cause having come before the Court for 
trial without a jury on May 28, 1940, and on May 



32 United States of America vs. 

29, 1940, and having been ordered submitted for a 
decision, and the Court having duly considered the 
matter, now files its " Conclusions of the Court" 
and orders as follows : 

Upon all the evidence and stipulation in the rec- 
ord, Findings of Fact, Conclusions of Law, and 
Judgment are ordered for the plaintiff as demanded 
by the Complaint under the issues of Complaint 
and Answer, and against the defendant under the 
issues of the Counterclaim. Attorneys for the plain- 
tiff will prepare, serve, and present the same under 
the rules within five days from notice hereof. Ex- 
ceptions allowed defendant. See written Conclusions 
of the Court filed herein this day. [32] 



[Title of District Court and Cause.] 

CONCLUSIONS OF THE COURT 

McCormick, District Judge: 

When consideration is given to the irreconcilable 
conflict of federal court decisions upon the crucial 
factual issue in this action, i. e., whether taxpayer 
in rebabbitfng used and damaged connection rods of 
automobiles is a manufacturer or producer of such 
parts or accessories, it is indisputable that there is 
more than doubt as to the meaning of the terms 
"manufacturer" or "producer" in Section 606 of 
Revenue Act 1932 and subsection (c) thereof. 47 
Stat, at Large, Part 1, pp. 261-262, Title 33 U. S. 
C. A., Sec. 606. 



J. Leslie Morris Co., Inc. 33 

Under such a record doubts arising under the 
taxing statute should be resolved against the taxing 
agency and favorable to the taxpayer. Miller v. Nut 
Margarine Co., 284 U. S. 498, at page 508; Erskine 
v. United States, 9 Circuit, 1936, 84 F. 2d 691. 

It is only by straining the terms " manufacturer" 
and " producer" contained in the taxing statute 
under consideration from their usual, ordinary and 
normally understood meanings into all-inclusive sit- 
uations that these terms of doubtful signification 
can be extended to a service station or processor 
such as plaintiff taxpayer, whose transactions under 
consideration in this cause are actually no more 
than repairing damaged used connecting rods of 
automobiles and charging for the repair job [33] 
and service upon delivery of the customer's re- 
paired rod or of another rebabbited second-hand 
repaired rod. We think no such forced and omnibus 
meaning of the terms " manufacturer" or " pro- 
ducer" can be fairly attributed to Congress in order 
to subject the articles sold by the plaintiff to the 
tax under (c) of Section 606. There is nothing in 
the statute which intimates that such was the Con- 
gressional intent, The decision of the District Court 
for the Northern District of California in A. P. 
Bardet, et al., d.b.a. Pioneer Motor Bearing Co. v. 
United States, No. 20364L, decided May 18, 1938, 
384 C. C. H. p. 10,589, wherein the taxpayers suing 
are competitors of the plaintiff who had engaged in 
a like process and business of rebabbiting connec- 
tion rods of automobile engines, as the taxpayer, 



34 United States of America vs. 

and who were held not to be manufacturers under 
the same statute as here involved, persuades us to 
conclude that the operations and practices shown by 
the record before us are neither manufacture nor 
production of automobile parts within the meaning 
of subsection (c) of Section 606, Revenue Act 1932. 

Our conclusions are also supported by the deci- 
sion of the District Court (Mo., 1937) in Hempy- 
Cooper Mfg. Co. v. United States, 19 Am. Fed. Tax 
Reports 1313, and Con-Rod Exchange, Inc., v. Hen- 
drickson (D. C, W. D. Wash., 1939) 28 F. Supp. 
924. These cited tax cases involved rebabbited con- 
necting rods of automobiles, and we think they pre- 
sent situations identical with the record before us 
in this action. 

For the sake of uniformity, if for no other reason, 
taxpayers identically situated and doing precisely 
the same thing in relation to tax laws should be 
treated alike. Our inquiries and investigations have 
failed to disclose that the government has taken ap- 
peal in the cases referred to, and we are therefore 
justified in assuming that refunds have been made 
to the respective taxpayers situated as is the plain- 
tiff taxpayer in [34] this action. 

We are not unmindful of the decision of the 
Seventh Circuit Court of Appeals in Clawson & 
Bals, Inc., v. Harrison, Collector, 108 F. 2d 991, 
reaching a contrary conclusion as to the meaning 
of the terms "manufacturer'' and "producer" as 
applied to rebabbiting activities similar to those 
shown by the record before us. This decision by a 



J. Leslie Morris Co., Inc. 35 

federal appellate court is entitled to and has been 
given careful study and respectful consideration. 
We feel, however, that no adequate discussion is 
to be found in the opinion of the court, differen- 
tiating between the broad meaning of the terms in 
matters of general concern and those relating spe- 
cifically to tax laws. Such a distinction is supported 
by eminent authority, and we believe it must be 
regarded in ascertaining the meaning of tax legis- 
lation where the taxing statute itself does not clearly 
define the meaning of terms contained in it. See 
Hartramft v. Wiegman, 121 IT. S. 609; Kuenzle v. 
Collector, etc., 32 Philippine 516, and Heacock Co. 
v. Collector, etc., 37 Philippine 979. 

We think the rule of stare decisis is not appli- 
cable to the decision of the learned Court of Ap- 
peals of the Seventh Circuit. See Continental Se- 
curities Co., v. Interborough R. T. Co., 165 Fed. 945, 
at p. 960. 

Inasmuch as our Circuit Court of Appeals has 
not considered or decided the question under consid- 
eration in this action, we are justified in formulat- 
ing and reaching our own conclusions under the 
record before us and in the light of other identical 
situations considered and determined uniformly by 
the federal courts of the Ninth Circuit. Accordingly, 
as the plaintiff taxpayer has not passed on the tax 
to the customer or to anyone, it is entitled to recover 
the amount illegally collected, and the government 
is not entitled to anything [35] under its counter- 
claim. 



36 United States of America vs. 

Findings and judgment are ordered for the plain- 
tiff and against the defendant as prayed under the 
issues of complaint, answer and counterclaim. 

Dated this July 24, 1940. 

[Endorsed] : Filed Jul. 24, 1940. R, S. Zimmer- 
man, Clerk. By Francis E. Cross, Deputy Clerk. 

[36] 



[Title of District Court and Cause.] 

FINDINGS OF FACT AND CONCLUSIONS 

OF LAW 

The above entitled cause came on regularly for 
trial on the 28th day of May, 1940, at the hour of 
10 o'clock A. M. in the above entitled court, the 
Honorable Paul J. McCormick, Judge, presiding, 
a jury having been expressly waived. Darius F. 
Johnson, Esquire and Messrs. Meserve, Mumper & 
Hughes, appearing for plaintiff and Ben Harrison, 
United States Attorney, E. H. Mitchell, Assistant 
United States Attorney, Armond Monroe Jewell, 
Assistant United States Attorney and Eugene Har- 
pole, Special Attorney, Bureau of Internal Rev- 
enue, appearing for the defendant United States of 
America, and evidence both oral and documentary 
having been introduced and the court being fully 
advised in the premises, and the cause having been 
submitted for decision, the court now makes its 
findings of fact as follows: 



J. Leslie Morris Co., Inc. 37 

FINDINGS OF FACT 

I. 

The court finds that the plaintiff, J. Leslie Morris 
Company, Inc., at all times herein mentioned was, 
and now is, a corporation duly organized and exist- 
ing under and by virtue of the laws of the State of 
California, with its principal place of business lo- 
cated in the City of Los Angeles, County of Los 
Angeles, State of California. Said principal place 
of business is located within the 6th Collection Dis- 
trict of California. [37] 

That the Articles of Incorporation of plaintiff set 
forth the following purposes of its incorporation : 

"To own, maintain and operate a business 
for the manufacture, sale and distribution of 
automotive and industrial bearing metals and 
products. 

To own, maintain and operate branch plants 
and offices in the State of California and else- 
where for the manufacture, sale and distribu- 
tion of such metals and products. 

To acquire land, buildings and personal prop- 
erty in the State of California and elsewhere 
for the purposes of establishing, maintaining 
and operating such plants and offices as may 
be necessary for the manufacture, sale and dis- 
tribution of such metals and products. 

To acquire, by purchase, lease or assignment, 
patents and patent rights bearing on the manu- 
facture of such metals and products. 



38 United States of America vs. 

To acquire, by purchase, lease or assignment, 
plants or businesses of other persons, firms or 
corporations for the further development of the 
business of this corporation, and to acquire and 
hold shares of stock and bonds of other cor- 
porations, and to sell, exchange or otherwise 
dispose of or trade in such shares and bonds. 

To do any and all things necessary to prop- 
erly carry on the business of the corporation, 
and to do any and all things necessary or inci- 
dent to the carrying of the various lines of 
business in which this corporation may now or 
hereafter be engaged." 

That plaintiff stated in its Capital Stock Tax 
returns for the years 1933, 1934 and 1935, in answer 
to the question: " Nature of [38] Business in De- 
tail", as follows: (1933) " Manufacture motor bear- 
ings"; (1934) "Rebabbitting Connecting Rods"; 
and (1935) "Rebabbitting Connecting Rods". That 
plaintiff stated in its Corporation Franchise Tax 
returns for the years 1932, 1933 and 1934, in answer 
to the question "Kind of Business", as follows: 
(1932) "Mfg. Motor Bearings"; (1933) "Mfg. Mo- 
tor Bearings"; and (1934) "Mfg. Motor Bearings". 

II. 

The court finds that one Nat Rogan was, to wit, 
July 30, 1935, and prior thereto, and thence con- 
tinuously up to and including the date of the filing 
of plaintiff's complaint, Collector of Internal Rev- 



J. Leslie Morris Co., Inc. 39 

enue of the United States for the 6th District of 
California. 

III. 
The court finds that the tax and interest involved 
herein arises under the laws of the United States 
providing for internal revenue and more specifically 
under Section 606 '(c) of the Internal Revenue Act 
of 1932. That all of the taxes and interest sued for 
herein were assessed and imposed in respect of sales 
by plaintiff of rebabbitted automobile connecting 
rods during the period from June 21, 1932, to Au- 
gust 1, 1935. All of said connecting rods were manu- 
factured by persons, firms or corporations other 
than plaintiff and before their acquisition by plain- 
tiff, had been used as operating parts for automobile 
motors, and by reason of such use the babbitt metal 
lining constituting a part of said connection rods 
had become worn, chipped, roughened and otherwise 
impaired; except that when plaintiff's stock was low 
in certain sizes plaintiff would purchase new rods 
which had never been used from automotive manu- 
facturers or their representatives and sell them to 
its customers. The percentage of new rods thus sold, 
however, is very small — less than five (5) per cent. 

IV. 

The court finds that none of the articles sold by 
this [39] plaintiff, on which the tax sued for herein 
was assessed and paid, were manufactured or pro- 
duced or imported by said plaintiff; that plaintiff 
is, and at all times herein mentioned was, engaged 



40 United States of America vs. 

in the business of repairing and rebabbitting worn 
and damaged automobile connecting rods; that the 
process used was only a repair and did not change 
the identity of the parts in any manner, trade- 
names and model numbers appearing thereon were 
not altered or removed; that all of the connecting 
rods sold by plaintiff were packed by plaintiff in 
cartons bearing its trade name, "Moroloy bearing 
service" and stating, "Rebabbitted Connecting 
Rods, Centrifugally Cast, Accurately Machined ". 

It is true that used connecting rods received by 
plaintiff from automotive jobbers represent about 
85% of the rods received by plaintiffs; about 10% 
are received from commercial accounts and about 
5% received from automobile dealers. The rods to 
be rebabbitted are received in packages containing 
from one rod to one hundred rods per package; 
however, the packages average between twenty and 
sixty rods per package. The shippers deliver them 
to the plaintiff. The rods are removed from the 
packages and checked against the packing slips. 
Any special instructions regarding rebabbitting are 
removed from the package at this time. About 20% 
of the rods carry these special specifications, re- 
quired usually because of undersizes or that the 
same bushings are to remain. 

It is true that the used rods are segregated ac- 
cording to their respective types and any pin bush- 
ings are removed. (About ^2 the r °ds have a clamp 
type shank end and require no pin bushings). They 
are removed by an arbor press or with a hammer 



J. Leslie Morris Co., Inc. 41 

and chisel. On about % of the rods it is necessary 
to remove the nuts and bolts and use auxiliary nuts 
and bolts during the process in order that the orig- 
inal nuts and bolts may be used again. A power 
driven socket wrench is used on all nuts. [40] 

It is true that the babbitt is then melted from 
the bearing end of the rod by placing that end into 
a solution of molten babbitt. Any remaining babbitt 
adhering is chipped off with a chisel and the bear- 
ing end of the rod is then cleaned with hydrochloric 
acid. The bearing end of the rod is then dipped into 
molten tin or solder so that the babbitt when poured 
will bond to the rod. The nuts are removed using 
the same power driven socket wrench and steel sepa- 
rators are inserted between the cap and the shank 
and the nuts and bolts are replaced. Separators keep 
the cap from adhering to the shank when the bab- 
bitt is applied. Model A Ford rods require no sepa- 
rators. Any oil holes in the bearing end of the rod 
are plugged with asbestos wicking, small corks, or 
even toothpicks in order to prevent the babbitt from 
plugging the oil holes during the rebabbitting 
process. 

It is true the bearing end of the rod is inserted 
into a mould mounted on a revolving spindle at 
right angle to the axis of the spindle. The rod is 
then rotated and by means of a hand ladle molten 
babbitt is poured through an opening in the mold. 
The centrifugal force spreads it evenly over the 
inside surface of the bearing end of the rod. On 
about 25% of the rods, the rebabbitting must be 



42 United States of America vs. 

done by hand. This is accomplished by placing the 
bearing end of the rod in a stationary mould and 
after calking, babbitt is poured into the space cov- 
ering the inside surface of the rod. 

It is true the rods are then cleaned by an oakite 
bath. Steel separators are then removed by means 
of another power driven socket wrench and any 
auxiliary nuts and bolts are removed and the origi- 
nals replaced. A revolving sand paper disk is used 
to remove adhering particles of babbitt, Two drill 
presses are used to clean out the oil holes. The rods 
are then dipped in a rust preventive and hung on 
a rack to dry. The rods are then placed in a lathe 
and the babbitt is rough bored, faced and cham- 
fered. The babbitt on about 20% of the rods must 
be bored to special undersize as ordered; a second 
lathe [41] is used for this purpose. A hand milling 
machine is used to cut oil pockets in the babbitt. 
About 50% of the rods rebabbitted require oil pock- 
ets. A slotting tool is used to separate rod and cap 
on Model A Ford rods. This operation leaves neces- 
sary oil grooves in the babbitt. A circular saw is 
used to notch the babbitt flange. About % 0I * ^ e 
rods require new bushings in the small end of the 
shank, w T hich are installed by a hand operated arbor 
press. Approximately 50% of the rods require the 
babbitt flange to be faced by a special tool placed 
in a drill press. Model A Ford and 6 cylinder Chev- 
rolet rods require an oil groove on the face of the 
babbitt bearing which is cut in the shape of a figure 
8 by a hand operated grooving machine. Certain 



J. Leslie Morris Co., Inc. 43 

Pontiac bearings require a continuous oil groove 
around the center of the babbitt, which is cut by a 
motor driven cutting tool. 

It is true all of the rods except the 20% which 
are finished to special undersize, on the lathe, are 
finished to standard size by means of a hydraulical- 
ly operated broaching machine. On Model A Ford 
rods, it is necessary to use a chamfering tool mount- 
ed in a drill press to smooth the very thin pin bush- 
ings used in these rods. All rods are then given a 
final inspection and new nuts and bolts replaced 
where necessary. The rods are then boxed and ready 
for shipment. 

That plaintiff issued illustrated catalogues con- 
taining price lists and advertising and also issued 
price lists; that both the price lists and the cata- 
logues were issued under the name of "Moroloy 
Bearing Service" and referred to the rods as "Re- 
babbitted"; that in the catalogues and price lists 
plaintiff held itself out to be a company with 
branches from coast to coast and listed between 
fourteen and fifteen branches through the United 
States and Canada. The catalogues referred to these 
branches in the following statement : 

" Service 
Fifteen manufacturing branches located at 
strategic points [42] over the United States 
and Canada, rendering a coast to coast service, 
convenient to every jobbing center. Ample stock 
at all branches assure same day shipment. Tele- 



44 United States of America vs. 

phone and telegraphic orders receive instant 
attention." 

That the invoices of plaintiff bore this title: 
"Moroloy bearing service, J. Leslie Morris Co,, 
Inc." and under this title were a list of addresses 
in thirteen different cities in the United States and 
Canada purporting to be branches. 

V 

The court finds that on or about the 18th day of 
November, 1935, the defendant, acting by and 
through the Bureau of Internal Revenue of the 
Treasury Department, and the Collector of Internal 
Revenue for the Sixth District of California, deter- 
mined that there were due from plaintiff, pursuant 
to the provisions of Section 606 (c) of the Internal 
Revenue Act of 1932, certain excise taxes together 
with interest thereon, upon the sale by plaintiff of 
rebabbitted automobile connecting rods, in the sum 
of $6,800.59; and pursuant to such determination 
the defendant assessed said taxes and interest, or 
feaused the same to be assessed against the plaintiff, 
and the Collector of Internal Revenue for the Sixth 
District of California made demand upon plaintiff 
for the payment of said taxes and interest. 

VI 

The court finds that pursuant to the aforesaid 
demand, the plaintiff paid to the Collector of Inter- 
nal Revenue of the United States for the Sixth Dis- 
trict of California, the sum of $500.00, on or about 
the 1st day of September, 1937. 



J. Leslie Morris Co., Inc. 45 

VII 

The court finds that on or about the 18th day of 
November, 1937, in accordance with the provisions 
of the Internal Revenue Act of 1932, the plaintiff 
duly filed with the Collector of Internal [43] Reve- 
nue of the United States for the Sixth District of 
California, at his office in the City of Los Angeles, 
State of California, a claim for refund of said 
$500.00, representing tax and interest paid under 
provisions of Section 606 (c) of the Internal Reve- 
nue Act of 1932; that said claim for refund was 
duly filed on Official Form Number 843 ; that in said 
claim for refund plaintiff alleged and set forth as 
the grounds for the refund claimed, as follows, to 
wit: 

" Commissioner of Internal Revenue, 
Washington, D. C. 

Sir: Re: J. Leslie Morris Co. Inc 

1361 S. Hope St., 
Los Angeles, Calif. 

Under account number Nov. 36 Misc 2027-1 
your office assessed $6,800.59 against the above 
taxpayer to cover the manufacturer's excise tax 
on the sale of rebabbitted automobile connect- 
ing rods during the period from June 21, 1932, 
to August 1, 1935. On September 1, 1937, this 
taxpayer made a payment of $500.00 on said 
assessment. 

The above payment of $500.00 represents a 
payment by this taxpayer on the liability as 



46 United States of America vs. 

established by the commissioner's office. This 
tax has not been passed on to the purchaser in 
any manner, either by separate billing or by a 
raise in prices. 

The J. Leslie Morris Co., Inc., is engaged in 
the business of rebabbitting worn automobile 
connecting rods. The process is only a repair 
and does not alter the identity of the rod as 
established by the manufacturer. The finished 
article is clearly marked to show that the re- 
pair work was done by this taxpayer. The fin- 
ished article is packed in a carton marked "re- 
babbitted" and bearing the statement "Our fa- 
mous spinning process used in repairing this 
connecting rod." This company is well known 
to the automobile trade as a rebabbitter of rods. 
They have never manufactured a new [44] rod, 
and could not do so if they wished for the rea- 
son that they have not the equipment which 
would be necessary to make a new rod. 

It is contended that since the rebabbitted con- 
necting rods do not lose their original identities 
and since the rebabbitting is only a repair pro- 
cess, that no tax should attach upon the sale 
thereof. This contention is based on the rulings 
pertaining to the rebuilding of storage batter- 
ies, automobile engines and upon the following 
rulings and decisions : 

S. T. 458 C. H. June, 1925, p. 253. This ruling 
held that w T here the manufacturer of automo- 
bile truck chassis, in the sale of his products, 



J. Leslie Morris Co., Inc. 47 

took in part payment trucks of his own make, 
some of which were repaired by replacing un- 
serviceable parts by new parts, that no tax 
would attach to the sale thereof under 'Section 
600 (3) of the Internal Revenue Act of 1924, 
but that a tax was due on the sale of the new 
parts used in the repairing of the old trucks. 
Some used chassis were dismantled and usable 
parts were used in the manufacture of truck 
chassis, together with other salvaged parts and 
new parts, producing a chassis which had no 
previous existence. Only in the latter instance 
would tax attach to the sale. 

This policy was continued with reference to 
used motorcycles by a ruling published in 1932. 
(S. T. 514, C. B. December, 1932, p. 471) : 

• " Where manufacturer A accepts as a 
trade-in a used motorcycle made by manufac- 
turer B, the resale by manufacturer A is not 
taxable because it is not a sale by the manu- 
facturer, producer or importer. However, in 
the event that used motorcycles are so ma- 
terially changed before being resold as to lose 
their original identity, the resale of such ma- 
chine is subject to the tax imposed by section 
606 (b) of the Internal Revenue Act of 
1932." ' 

In a case relating to retreading of automobile 
tires, [45] published in 1933, the Bureau of 
Internal Revenue once more applied the same 
rule. (S. T. 648, C. B. June, 1933, p. 304): 



48 United States of America vs. 

i "The retreading of old tires by resurfac- 
ing or replacing of the actual tread down to 
the tread line, without altering the side walls 
or destroying the original identity of the tire, 
does not constitute the manufacture of a tax- 
able article.' ' ' 

This rule was extended by J. C. Skinner vs. 
United States to exclude all retreaded tires 
from this tax. In this case the court said that 
retreaded tires were known to the automobile 
trade for many years prior to the enactment 
of the Internal Eevenue Act of 1932 and that 
if Congress had intended that the tax should at- 
tach to the sale of retreaded tires that such 
provision would have been put in the act, and 
that since such provision was not put in the act 
it appears that Congress intended for the tax 
to attach only to the sale of new tires. 

This rule was continued by the Federal Court 
in Monteith Brothers Company vs. United 
States, rendered October 5, 1936, and in Hempy- 
Cooper Manufacturing Company vs. United 
States. Both these cases related to the taxability 
of rebabbitted connecting rods and rewound ar- 
matures. The Court found in favor of the plain- 
tiff in both these cases, and adopted findings 
which left no doubt as to the sale of rebabbitted 
connecting rods being free of tax. 

Attention is called to a letter to the National 
Standard Parts Association, Detroit Michigan, 
over the signature of Mr. D. S. Bliss, dated 



J. Leslie Morris Co., Inc. 49 

June 30, 1936, in which it was held that no tax 
attached to the sale or exchange of rebuilt auto- 
mobile engines, even though many new parts 
were used. Apparently it was presumed that all 
the parts had been purchased tax paid. In this 
letter Mr. Bliss mentioned that • repaired con- 
necting rods' were used in the rebuilt engine 
[46] under consideration. 

In view of the foregoing rulings and court 
decisions it is impossible to reconcile the action 
of the Bureau of Internal Revenue in holding 
that the sale of rebabbitted connecting rods is 
subject to tax. The intent of the above authori- 
ties is very clear and leaves no doubt as to the 
law applicable in the instant case. Accordingly, 
taxpayer claims that the tax referred to here- 
tofore was unjustly and illegally collected and 
should be refunded. 

J. LESLIE MORRIS COM- 
PANY, INC., 
By J. LESLIE MORRIS, 

President." 
VIII 
The court finds that on or about the 25th day of 
March, 1938, the Commissioner of Internal Revenue 
of the United States rejected and disallowed plain- 
tiff's said claim for refund of $500. 

IX 

The court finds that pursuant to the demand of 
defendant, all as hereinabove set forth, plaintiff 



50 United States of America vs. 

paid to the Collector of Internal Revenue of the 
United States for the Sixth District of California, 
the sum of $500 on or about the 22nd day of April, 
1938. 

X 
The court finds that on or about the 7th day of 
June, 1938, in accordance with the provisions of 
the Internal Revenue Act of 1932, the plaintiff duly 
filed with the Collector of Internal Revenue of the 
United States for the Sixth District of California, 
at his office in the City of Los Angeles, State of 
California, a claim for the refund of said $500.00 
representing tax and interest paid under provisions 
of Section 606 (c) of the Internal Revenue Act of 
1932; that said claim for refund was duly filed on 
official form number 843; that in said claim for re- 
fund plaintiff alleged and set [47] forth as the 
grounds for the refund claimed, as follows, to wit: 

" Commissioner of Internal Revenue, 

Washington, D. C. 

Sir: Re: J. Leslie Morris Company, Inc., 

1361 S. Hope Street 
Los Angeles, California. 

Under Account Number Nov. 36 Misc. 20-27-1 
your office assessed $6800.59 against the above 
taxpayer to cover the manufacturer's excise tax 
on the sale of rebabbitted automobile connect- 
ing rods during the period from June 21, 1932, 
to August 1, 1935. On April 21st, 1938, this tax- 
payer made a payment of $500.00 on said as- 



J. Leslie Morris Co., Inc. 51 

sessment. The above payment of $500.00 repre- 
sents a payment by this taxpayer on the liability 
as established by the Commissioner's office. This 
tax has not been passed on to the purchaser in 
any manner, either by separate billing or by a 
raise in prices. 

The J. Leslie Morris Company, Inc., is en- 
gaged in the business of rebabbitting worn auto- 
mobile connecting rods. The process is only a 
repair and does not alter the identity of the 
rods as established by the manufacturer. The 
finished article is clearly marked to show that 
the repair work was done by this taxpayer. The 
finished article was packed in a carton marked 
"rebabbitted" and bearing the statement "Our 
famous spinning process used in repairing this 
connecting rod". This company is well known 
to the automobile trade as a rebabbitter of rods. 
They have never manufactured a new rod, and 
could not do so if they wished for the reason 
that they have not the equipment which would 
be necessary to make a new rod. 

It is contended that since the rebabbitted con- 
necting rods do not lose their original identi- 
ties and since the rebabbitting is only a repair 
process, that no tax should [48] attach upon 
the sale thereof. This contention is based on the 
rulings pertaining to the rebuilding of storage 
batteries, automobile engines and upon the fol- 
lowing rulings and decisions : 



52 United States of America vs. 

S. T. 458 C. B. June 1925, p. 265. This ruling 
held that where the manufacturer of automo- 
bile truck chassis in the sale of his product, 
took in part payment trucks of his own make, 
some of which were repaired by replacing un- 
serviceable parts by new parts, that no tax 
would attach to the sale thereof under Section 
600 (3) of the Internal Eevenue Act of 1924, 
but that a tax was due on the sale of the new 
parts used in the repairing of the old trucks. 
Some used Chassis were dismantled and usable 
parts were used in the manufacture of truck 
chassis, together with other salvaged parts and 
new parts, producing a chassis which had no 
previous existence. Only in the latter instance 
would tax attach to the sale. 

This policy was continued with reference to 
used motorcycles by a ruling published in 1932. 
(S. T. 514, C. B. Dec. 1932, p. 471) : 

1 Where manufacturer A accepts as a trade- 
in a used motorcycle made by manufacturer 
B, the resale by manufacturer A is not tax- 
able because it is not a sale by the manufac- 
turer, producer or importer. However, in the 
event that used motorcycles are so materially 
changed before being resold as to lose their 
original identity, the resale of such machine 
is subject to the tax imposed by Section 606 
(b) of the Internal Revenue Act of 1932. ' 

In a case relating to retreading of automobile 
tires published in 1933, The Bureau of Inter- 



J. Leslie Morris Co., Inc. 53 

nal Revenue once more applied the same rule. 
(S. T. 648 C. B. p. 384) : 

'The retreading of old tires by resurfacing 
or replacing of the actual tread down to the 
tread line, without altering the side walls or 
destroying the original identity of the tire, 
does not constitute the manufacture of a tax- 
able article.' [49] 

This rule was extended by J. C. Skinner v. 
United States to exclude all retreaded tires 
from this tax. In this case the court said that 
retreaded tires were known to the automobile 
trade for many years prior to the enactment of 
the Internal Revenue Act of 1932 and that if 
Congress had intended that the tax should at- 
tach to the sale of retreaded tires that such pro- 
vision would have been put in the act, and that 
since such provision was not put in the act it 
appears that Congress intended for the tax to 
attach only to the sale of new tires. 

This rule was continued by the Federal Court 
in Montieth Bros. Company vs. United States 
rendered October 5, 1936, and in Hempy-Cooper 
Manufacturing Company v. United States. Both 
these cases related to the taxability of rebab- 
bitted connecting rods and rewound armatures. 
The court found in favor of the plaintiff in 
both of these cases, and adopted findings which 
left no doubt as to the sale of rebabbitted con- 
necting rods being free of tax. 



54 United States of America vs. 

Attention is called to a letter to the National 
Standard Parts Association, Detroit, Mich., 
over the signature of Mr. D. S. Bliss in which 
it was held no tax attached to the sale of ex- 
change of rebuilt automobile engines, even 
though many new parts were used. Apparently 
it was presumed that all the parts had been 
purchased tax paid. In this letter Mr. Bliss 
mentioned that ' repaired connecting rods' were 
used in the rebuilt engine under consideration. 

In view of the foregoing rulings and court 
decisions it is impossible to reconcile the action 
of the Bureau of Internal Revenue in holding 
that the sale of rebabbitted [50] connecting 
rods is subject to tax. The intent of the above 
authorities is very clear and leaves no doubt 
as to the law applicable in the instant case. Ac- 
cordingly, taxpayer claims that the tax referred 
to heretofore was unjustly and illegally col- 
lected and should be refunded. 

J. LESLIE MORRIS COM- 
PANY, INC. 
By J. LESLIE MORRIS, 

President. " 

XI 

The court finds that on or about the 7th day of 
April, 1939, the Commissioner of Internal Revenue 
of the United States rejected and disallowed plain- 
tiff's said claim of $500.00. 



J. Leslie Morris Co., Inc. 55 

XII 

The court finds that pursuant to the demand of 
defendant, all as hereinabove set forth, plaintiff 
paid to the Collector of Internal Revenue of the 
United States for the Sixth District of California, 
the sum of $500 on or about the 13th day of August, 
1938. 

XIII 

The Court finds that on or about the 20th day of 
August, 1938, in accordance with the provisions of 
the Internal Revenue Act of 1932, the plaintiff duly 
filed with the Collector of Internal Revenue of the 
United States for the Sixth District of California, 
at his office in the City of Los Angeles, State of 
California, a claim for refund of said $500.00, rep- 
resenting tax and interest paid under provisions of 
Section 606 (c) of the Internal Revenue Act of 
1932 ; that said claim was duly filed on official form 
number 843; that in said claim for refund plaintiff 
alleged and set forth as the grounds for the refund 
claimed, as follows, to wit : 

" Commissioner of Internal Revenue, 
Washington, D. C. 

Re: J. Leslie Morris Co., Inc., 
1361 S. Hope St. 
Dear Sir: Los Angeles, Calif. [51] 

Under account number Nov. 26 Misc. 2027-1 
your office assessed $6,800.59 against the above 
taxpayer to cover the manufacturer's excise tax 
on the sale of rebabbitted automobile connect- 



56 United States of America vs. 

ing rods sold during the period from June 21, 
1932 to August 1, 1935. On August 9, 1938, this 
taxpayer made a payment of $500.00 on said as- 
sessment. 

The J. Leslie Morris Company is engaged in 
the business of rebabbitting worn automobile 
connecting rods. The process is only a repair 
and does not alter the identity of the rod as 
established by the manufacturer. The finished 
article is clearly marked to show that the repair 
work was done by this taxpayer and is packed 
in a carton marked "Re-Babbitted" and bear- 
ing the statement "Our famous spinning pro- 
cess used in repairing this connecting rod." 
This Company is well known to the automobile 
trade as re-babbitter of connecting rods. They 
have never manufactured a new rod, and could 
not do so for the reason that they have not the 
necessary equipment. 

It is contended that since the rebabbitted con- 
necting rods do not lose their original identity 
and since the rebabbitting is only a repair, that 
no tax should attach upon the sale thereof. Our 
contention is based on the actual facts and the 
following Treasury decisions and Court deci- 
sions : 

S. T. 458 C. B. June 1925, p. 253. This ruling 
held that where the manufacturer of automo- 
bile truck chassis, repaired used trucks by re- 
placing worn parts with new parts, that no tax 
attached to the sale thereof under section 606 



J. Leslie Morris Co., Inc. 57 

(3) of the Internal Eevenue Act of 1924, but 
that a tax would attach to the sale of the new 
parts used therein. 

This policy was continued with reference to 
the sale of used motorcycles by a ruling pub- 
lished in 1932. S. T. 514, [52] C. B. December 
1932, p. 471. In this instance the Bureau held: 
' Where manufacturer A accepts as a trade- 
in a used motorcycle made by manufacturer 
B, the resale by manufacturer A is not a sale 
by the manufacturer, producer or importer. 
However, in the event that used motorcycles 
are so materially changed before being resold 
as to lose their original identity, the resale 
of such machine is subject to the tax imposed 
by section 606 (b) of the Internal Revenue 
Act of 1932/ 

In a case relating to retreading of automobile 
tires, published in 1933, the Bureau of Internal 
Revenue once more applied the same rule. S. T. 
648, C. B. June 1933, page 384. 

'The retreading of old tires by resurfacing 
or replacing of the actual tread down to the 
tread line, without altering the side walls or 
destroying the original identity of the tire, 
does not constitute the manufacture of a tax- 
able article.' 

The above rule was followed by the United 
States District Court in J. C. Skinner v. United 
States, Federal Supplement 999. In this case the 



58 United States of America vs. 

Court said that retreaded tires were known to 
the automobile trade for many years prior to 
the enactment of the Internal Revenue Act of 
1932 and that if Congress had intended that the 
tax should attach to the sale of retreaded tires, 
that such provision would have been put in the 
act, and that since such provision was not put 
in the act it appears that Congress intended for 
the tax to attach only to the sale of new tires. 

This rule was continued by the Federal Dis- 
trict Court in Montieth Brothers Company vs. 
United States, Hempy-Cooper Manufacturing 
Company vs. United States and Pioneer Motor 
Bearing Company vs. United States. 

In view^ of the foregoing decisions and the 
fact that the rebabbitting process does not alter 
the original identity of the connecting rods, it 
is claimed that no tax is due upon the sale 
thereof, and that the $500.00 payment referred 
to above was unjustly and illegally collected and 
should be [53] refunded. 

J. LESLIE MORRIS COM- 
PANY, INC. 
By J. LESLIE MORRIS, 

President." 

XIV 

The court finds that on or about the 7th day of 
April, 1939, the Commissioner of Internal Revenue 
of the United States rejected and disallowed plain- 
tiff's said claim for refund of $500.00. 



J. Leslie Morris Co., Inc. 59 

XV 

The court finds that the tax and interest covered 
by this suit has not been added to, or included in 
the sale price of any of the connecting rods rebab- 
bitted by plaintiff, nor has said tax or interest been 
collected from the purchasers, either directly or in- 
directly. 

CONCLUSIONS OF LAW 

From the foregoing findings of fact, the court 
concludes as a matter of law, the following: 

1. That plaintiff has complied with all statutory 
requirements constituting conditions precedent to 
the institution and maintenance of this suit; that 
plaintiff's claims for refund of tax and each of 
them, are legally sufficient to constitute a claim for 
refund ; that defendant waived any and all grounds 
for rejection of plaintiff's claims as set forth here- 
inabove and each of them, which grounds were not 
set forth by defendant in its notice of rejection. 

2. That the excise tax imposed by Section 606 
(c) of the Internal Eevenue Act of 1932 does not 
apply to the sale of used connecting rods by plain- 
tiff which were rebabbitted as hereinbefore set 
forth. 

3. That the process of rebabbitting the used con- 
necting rods by plaintiff as hereinabove set forth, 
does not constitute manufacturing or production, 
but is only repair and the plaintiff was not [54] 
during the time involved in this action, the manu- 
facturer, producer or importer of connecting rods 



60 United States of America vs. 

within the meaning of Section 606 (c) of the In- 
ternal Eevenue Act of 1932. 

4. That Section 606 (c) of the Internal Revenue 
Act of 1932, does not levy a tax on the sale of used 
connecting rods rebabbitted as set forth in the with- 
in findings of fact and, therefore, the assessment 
heretofore alleged is illegal and void. 

5. That under the evidence and the law, the 
plaintiff is entitled to a judgment against defend- 
ant in the sum of $1500.00. 

Judgment is hereby ordered to be entered accord- 
ingly. 

Dated: August 21st, 1940. 

paul j. Mccormick 

Judge of the United States 
District Court. 
Approved as to form in accordance with Rule 8. 
ARMAND MONROE JEWELL, 

Assistant United States Attorney. 

[Endorsed] : Filed Aug. 21, 1940. R. S. Zimmer- 
man, Clerk. By B. B. Hansen, Deputy Clerk. [55] 



J. Leslie Morris Co., Inc. 61 

In the District Court of the United States Southern 
District of California, Central Division 

No. 433-M— Civil 

J. LESLIE MORRIS COMPANY, INC., 

Plaintiff, 

vs. 

UNITED STATES OF AMERICA, 

Defendant. 

JUDGMENT 

The above entitled cause came on regularly for 
trial on the 28th day of May, 1940, at the hour of 
10 o'clock A.M. in the above entitled court, the 
Honorable Paul J. McCormick, Judge, presiding, a 
jury having been expressly waived. Darius F. John- 
son, Esquire and Messrs. Meserve, Mumper & 
Hughes, appearing for plaintiff, and Ben Harrison, 
United States Attorney, E. H. Mitchell, Assistant 
United States Attorney, Armond Monroe Jewell, 
Assistant United States Attorney and Eugene Har- 
pole, Special Attorney, Bureau of Internal Reve- 
nue, appearing for the defendant United States 
of America, and evidence both oral and documen- 
tary having been introduced, and the court being 
fully advised in the premises, and the cause having 
been submitted for decision, and the court having 
filed herein its findings of fact and conclusions of 
law in accordance therewith: 

Now therefore, it is hereby ordered, adjudged and 
decreed that plaintiff have judgment against de- 



62 United States of America vs. 

f endant in the sum of $1500 ; that defendant recover 
nothing under its counterclaim. 

Dated: August 21st, 1940. 

PAUL J. McCORMICK, 

Judge of the United States District Court. 
Approved as to form in accordance with Rule 8. 
ARMOND MONROE JEWELL, 

Assistant United States Attorney. 
Judgment entered Aug. 21, 1940. 
Docketed Aug. 21, 1940. 
Book C. O. 3, Page 515. 

R. S. ZIMMERMAN, 

Clerk. 
By B. B. HANSEN, 

Deputy. 

[Endorsed] : Piled Aug. 21, 1940. R. S. Zimmer- 
man, Clerk. By B. B. Hansen, Deputy Clerk. [56] 



[Title of District Court and Cause.] 

NOTICE OP APPEAL 

Notice is hereby given that the United States of 
America, defendant above named, hereby appeals 
to the United States Circuit Court of Appeals for 
the Ninth Circuit, from that certain judgment en- 
tered in the above-entitled suit, numbered herein 
No. 433-M, on the 21st day of August, 1940, in which 
suit J. Leslie Morris Company, Inc., is plaintiff. 



J. Leslie Morris Co., Inc. 63 

Dated : November 19, 1940. 

WM. FLEET PALMER, 

United States Attorney. 
E. H. MITCHELL, 
Assistant United States Attorney. 
ARMOND MONROE JEWELL, 
Assistant United States Attorney. 
By ARMOND MONROE JEWELL, 
Attorneys for Defendant. 
Copy mailed Nov. 20, 1940, to Darius P. Johnson, 
Esq., Atty for Plaintiff, 1124 Van Nuys Bldg., Los 
Angeles, Calif. 

R. S. ZIMMERMAN, 

Clerk. 
By E. L. S., 

Deputy Clerk. 

[Endorsed]: Piled Nov 19, 1940. R. S. Zimmer- 
man, Clerk. By Edmund L. Smith, Deputy Clerk. 

[57] 



[Title of District Court and Cause.] 

ORDER EXTENDING TIME TO PILE REC- 
ORD AND DOCKET ON APPEAL 

Good cause appearing therefor, it is hereby or- 
dered that the defendant appellant may have to 
and including February 7, 1941, within which to 
file its record and docket the above-entitled cause 
on appeal to the Circuit Court of Appeals for the 
Ninth Circuit. 



64 United States of America vs. 

Dated: This 18th day of December, 1941. 
PAUL J. McCORMICK, 

United States District Judge. 

[Endorsed]: Filed Dec 18, 1940. R. S. Zimmer- 
man, Clerk. By Edmund L. Smith, Deputy Clerk. 

[58] 



[Title of District Court and Cause.] 

ORDER EXTENDING TIME TO FILE 
RECORD AND DOCKET CAUSE ON APPEAL 

Good cause appearing therefor, it is hereby or- 
dered that the defendant appellant may have to 
and including February 17, 1941, within which to 
file its record and docket the above-entitled cause 
on appeal to the Circuit Court of Appeals for the 
Ninth Circuit. 

Dated : This 5th day of February, 1941. 
PAUL J. McCORMICK, 

United States District Judge. 

[Endorsed]: Filed Feb. 5, 1941. R. S. Zimmer- 
man, Clerk. By J. M. Horn, Deputy Clerk. [59] 



[Title of District Court and Cause.] 

ORDER PERMITTING ORIGINALS TO BE 
SENT TO CIRCUIT COURT IN LIEU OF 
COPIES. 

Good cause being shown therefor, it is hereby or- 
dered that all of the original papers and exhibits in 



J . Leslie Morris Co., Inc. 65 

the above-entitled case may, pursuant to Rule 75 (i) 
of the Federal Rules of Civil Procedure, be sent to 
the United States Circuit Court of Appeals for the 
Ninth Circuit, in lieu of copies thereof, and said 
papers and exhibits may, by designation and stipu- 
lation of the parties, become part of the record 
on appeal in the above-entitled case. 

Dated : this 5th day of February, 1941. 
PAUL J. McCORMICK, 

Judge. 

[Endorsed]: Filed Feb. 5, 1941. R. S. Zimmer- 
man, Clerk. By J. M. Horn, Deputy Clerk. [60] 



[Title of District Court and Cause.] 1 

STIPULATION DESIGNATING RECORD 
ON APPEAL 

Pursuant to Rule 75(f) of the Federal Rules of 
Civil Procedure, it is hereby stipulated by and be- 
tween the parties hereto, through their respective 
counsel, that the following shall constitute the rec- 
ord on appeal in the above-entitled case : 

1. Complaint. 

2. Answer. 

3. Notice of transfer of proceedings to Judge 
McCormick dated September 19, 1939, signed by 
Clerk. 

4. Substitution of attorneys authorized April 23, 
1940, and accepted April 30, 1940. 

5. The Clerk's minutes of the District Court 



66 United States of America vs. 

dated May 29, 1940, before Honorable Paul J. Mc- 
Cormick. 

6. The Clerk's minutes of the District Court 
dated June 4, 1940, before Honorable Paul J. Mc- 
Cormick. 

7. The Clerk's minutes of the District Court 
dated July 24, 1940, before Honorable Paul J. Mc- 
Cormick. 

8. Conclusions of the Court dated July 24, 1940, 
before Honorable Paul J. McCormick. 

9. Findings of fact and conclusions of law signed 
by Honorable Paul J. McCormick on August 21, 
1940. [61] 

10. Judgment signed by Honorable Paul J. Mc- 
Cormick on August 21, 1940. 

11. Notice of Appeal dated November 19, 1940. 

12. Order extending time within which to file 
record on appeal and docket cause on appeal dated 
December 18, 1940. 

13. Order extending time within which to file 
record on appeal and docket cause on appeal dated 
February 5, 1941. 

14. Order permitting original papers and exhib- 
its to be sent to the Circuit Court in lieu of cop- 
ies on appeal dated February 5, 1941. 

15. All volumes of the Reporters Transcript in 
the above-entitled case. 

16. The following exhibits: (a) Plaintiff's Ex- 
hibits 1 to 64 inclusive; (b) Defendant's Exhibits 
A to F, inclusive. 



J. Leslie Morris Co., Inc. 67 

17. This Designation of Record On Appeal. 

Dated: February 6, 1941. 

WILLIAM FLEET PALMER, 

United States Attorney. 
EDWARD H. MITCHELL, 
Assistant United States Attorney. 

ARMOND MONROE JEWELL, 
Assistant United States Attorney. 
By ARMOND MONROE JEWELL, 
Attorneys for Defendant & Appellant. 
DARIUS F. JOHNSON, and 
MESERVE, MUMPER and 
HUGHES, 
By SHIRLEY E. MESERVE, 
Attorneys for Plaintiff & Appellee. 

[Endorsed]: Filed Feb 10, 1941. R. S. Zimmer- 
man, Clerk. By Edmund L. Smith, Deputy Clerk. 

[62] 



[Title of District Court and Cause.] 

CERTIFICATE OF CLERK 

I, R. S. Zimmerman, Clerk of the United States 
District Court for the Southern District of Califor- 
nia, do hereby certify that the foregoing pages, nunv 
bered 1 to 62, inclusive, contain full, true and cor- 
rect copies of the Complaint ; Answer to Complaint ; 
Notice of Transfer of Cause to Judge McCormick; 
Substitution of Attorneys; Minutes of the Court 
dated May 29, 1940, including Minute Order Sub- 
mitting Cause; Minute Order dated June 4, 1940, 
for Submission of Proposed Findings of Fact and 
Conclusions of Law ; Minute Order of July 24, 1940, 



68 United States of America vs. 

for Judgment; Conclusions of the Court; Findings 
of Fact and Conclusions of Law ; Judgment ; Notice 
of Appeal; Two Orders Extending Time to File 
Record and Docket Cause on Appeal; Order for 
Transmittal of Original Exhibits to Circuit Court 
of Appeals; and Stipulation Designating Contents 
of Record on Appeal ; which, together with the orig- 
inal Reporter's Transcript of Proceedings and Tes- 
timony, and the original Exhibits, transmitted here- 
with, constitute the record on appeal to the Circuit 
Court of Appeals for the Ninth Circuit. 

Witness my hand and the seal of said District 
Court, this 15th day of February, A. D. 1941. 
(Seal) R. S. ZIMMERMAN, 

Clerk. 
By EDMUND L. SMITH, 

Deputy Clerk. 

[63] 



[Title of District Court and Cause.] 
TESTIMONY 

Appearances : 
For the Plaintiff 

Darius F. Johnson, 
Meserve, Mumper and Hughes. 
By Shirley E. Meserve, Esq., 
615 Richfield Building, Los 
Angeles, California. 

For the Government : 

Wm. Fleet Palmer, Acting United 
States Attorney. 
A. M. Jewell, Assistant United 
States Attorney. [64] 



J. Leslie Morris Co., Inc. 69 

Los Angeles, California 
Tuesday, May 28, 1940. 10:00 O 'Clock A. M. 



Mr. Meserve: Has your Honor read the plead- 
ings? 

The Court : Yes, I have. 

Mr. Meserve: Mr. Jewell, I think probably the 
best way to present our proof would be by the in- 
troduction of the pictures first. 

The Court: Is there a dispute of fact as to 
whether the reconditioning amounted to a recon- 
struction ? 

Mr. Meserve : That is the issue. 

The Court : There is an issue of fact on that ? 

Mr. Jewell : No issue of fact of the process par- 
ticularly because we have worked together and have 
prepared a group of pictures which will be intro- 
duced on behalf of the Plaintiff, which illustrates the 
process, with a legend upon them. As to whether 
or not that particular process amounts to mere re- 
pair, as the Plaintiff contends, or, as the Govern- 
ment contends, manufacture, is the question before 
the Court. 

The Court : Is the Court to understand that what 
is the issue is the result of the activity, or what you 
call the process? 

Mr. Jewell : That is correct. 

Mr. Meserve: That is correct. That is why I re- 
frained from making an opening statement, be- 
cause I asked your Honor [65] whether you had 
read the pleadings. The issue, to my mind, is sim- 



70 United States of America vs. 

ply whether we are taxable under the provisions of 
Section C 606 of the Revenue Laws. The whole 
issue, as I view it, is whether the action of the Plain- 
tiff corporation in its business operation consti- 
tutes a manufacturing process or whether it is es- 
sentially a repair of a mechanical device. In order 
to present the matter graphically, Mr. Jewell for 
the Government and ourselves have reviewed a se- 
ries of photographs, and attached a legend to them 
to explain the same, in relation to Plaintiff's busi- 
ness, and we intend, of course, to illuminate that by 
testimony that cannot be covered by either the leg- 
end or the picture. 

Mr. Jewell, perhaps we can get in the record our 
stated understanding at our meeting yesterday, and 
the purpose of these pictures, so we will not be 
in confusion as to the stipulation. 

Mr. Jewell: Do you want me to state my view 
of it? 

Mr. Meserve: You can state your view of it, 
and if that accords with the way we understood 
it, it will not have to be stated twice. 

Mr. Jewell: It is hereby stipulated that the se- 
ries of photographs to be introduced on behalf of 
Plaintiff are true photographs of Plaintiff's busi- 
ness establishment as it now exists, and that the 
legend appearing beneath each picture constitutes 
the testimony of Mr. J. Leslie Morris, president of 
Plaintiff corporation, had he been asked those ques- 
tions [66] on direct examination. 

(The documents referred to was received in 



J. Leslie Morris Co., Inc. 71 

evidence and marked "Plaintiff's Exhibits 1 to 
32 Inch") 

[Set Out in Separate Volume.] 

Mr. Meserve: That is correct; and is the iden- 
tification of the photograph. 

Mr. Jewell : That is correct. 

Mr. Meserve: And for the sake of saving time. 

The Court : Very well. 

Mr. Meserve: Is that satisfactory to the Court? 

The Court: So understood. 

Mr. Meserve: We will offer first a photograph 
and legend, that we have indicated as one, which 
is 

The Clerk: Plaintiff's Exhibit 1 in evidence. 

The Court : Does the stipulation go to the extent 
that the process or method in use at the applicable 
time, under the complaint and answer, was the same 
as that depicted or picturized in the photographs? 

Mr. Jewell: No, if the Court please, except in- 
sofar as the direct testimony of Mr. Morris appear- 
ing at the bottom of the picture will go to prove it. 
The Government can't stipulate that was the pro- 
cess that was used. 

Mr. Meserve: We will connect that up, your 
Honor. 

The Court: Is the Court to understand that the 
Government is stipulating that this verbiage that ap- 
pears in typewriting under the picture in Plaintiff's 
Exhibit 1 may be considered as evidentiary, and 
has the same effect as evidence under oath % 

Mr. Jewell: That is correct, your Honor, sub- 



72 United States of America vs. 

ject to [67] the same right of cross examination, if 
that appears necessary. 

Mr. Meserve: Mr. Jewell and I dictated these 
legends together, and corrected them. There is one 
other statement I think appropriate to be in the 
record. It is to be understood between Plaintiff 
corporation and the Government that there will 
be no intention to take advantage of phrases in 
their perhaps technical application. In other words, 
a play of words is not intended by the legend; the 
legend is descriptive, and that the facts to be found 
by the Court are not to be applied from the leg- 
end except as it may be descriptive. That was the 
understanding, wasn't it? 

Mr. Jewell: Yes. 

Mr. Meserve : We got to the point where we were 
playing with words, as to whether they would have 
effect or not, and Mr. Jewell and I discussed it, and 
agreed that the legend was intended only to be de- 
scriptive. 

Mr. Jewell: I think it can be stated that the 
legend is only descriptive, and any use of the words 
therein shall not call for a conclusion by the words 
themselves pointing toward either repair or man- 
ufacture. 

The Court: The word "jobber" seems to be 
quoted in the legend attached to Exhibit 1. 

Mr. Jewell: I believe that is done for the pur- 
pose of indicating that it is a sort of a slang name. 

Mr. Meserve : In other words, it is a phrase that 
has [68~\ been developed in the trade or merchan- 



J. Leslie Morris Co., Inc. 73 

dising that perhaps is not an accurate statement of 
his exact business — jobber. 

The Court: There is no issue here of the cor- 
rect interpretation of the phrases that appear to 
be quoted in the legend? 

Mr. Jewell : That is correct. 

Mr. Meserve: That is correct. 

Mr. Jewell: We don't want the shadings of the 
w T ords to have bearing upon the legal conclusion, but 
they are just used as best we could for descriptive 
purposes. For instance, if we use the word "make," 
and that connotes that rods are manufactured by 
plaintiff, rather than substitute some other word 
we ask that the Court ignore that connotation and 
follow the process described pictorially and ver- 
bally. For instance, if we stipulated, or Plaintiff, 
Mr. Morris, testified that the rods are returned, 
there immediately arises an implication that he sent 
them out, so we have tried to avoid the use of that 
particular word. 

Mr. Meserve : The whole question, if your Honor 
pleases, is whether or not the J. Leslie Morris Com- 
pany manufactured a connecting rod that is used in 
the automotive industry, or repairs on existing con- 
necting rods. 

The Court: Does the Government concede that 
to be the sole and exclusive issue in the case? 

Mr. Jewell: Not the sole and exclusive issue, be- 
cause [69] of this fact: That the tax is levied on 
sales by a manufacturer — I don't believe there will 
be any controversy, but that method of doing busi- 



74 United States of America vs. 

ness by the Plaintiff corporation amounted to sales 
of these rods which they re-babbitted. Whether or 
not those sales were sales by a manufacturer of 
automobile accessories will, I believe, under the 
cases, draw now only upon the actual process, al- 
though principally so, but also upon the manner in 
which Plaintiff conducts his business, and the gen- 
eral similarity to a manufacturer aside from that 
mere process. 

The Court: That is what I was talking about; 
whether it was trade practice, or whether it is ad- 
mitted to be in a certain category. Trade practices 
are very material. If it is trade practice that has 
been acquiesced in by the Governmental agency, that 
is one thing; if it is an open field of investigation, 
it is quite another. 

Mr. Jewell: The Government contends that all 
evidence concerning the manner in which Plaintiff 
taxpayer, or the Plaintiff corporation, operates his 
business of merchandising the particular product, 
or, which construction is described in these pictures, 
and will be further elaborated on by testimony, that 
all of those facts, and the manner in which it con- 
ducts its business are relevant in determining 
whether or not sales by it were sales by a manu- 
facturer. 

The Court : The pleadings set up certain alleged 
conclusions by taxing agencies of the Government 
relating to re-tread- [70] ing tires, and other fab- 
ricated instrumentalities. I want to know whether 
those are going to be issues here, or whether you 



J. Leslie Morris Co., Inc. 75 

are conceding facts of just what was done, regard- 
less of the legal results from those facts. 

Mr. Jewell: I don't believe I understand your 
Honor with respect to those matters appearing in 
the pleadings. 

The Court : Maybe you have not read the plead- 
ings. 

Mr. Jewell: I believe I have. 

The Court: They cite a number of instances 
here in which they claim there is an analogy be- 
tween their cases and your cases. 

Mr. Jew T ell: Whether that analogy exists will 
depend upon the proof Plaintiff puts on. 

Mr. Meserve: Your Honor, I think we are still 
back to the fundamental statement I made. The 
issue, even though as amplified by Mr. Jewell for 
the Government is : Was the J. Leslie Morris Com- 
pany, during the time involved in this period, a 
manufacturer of a device used in the automotive 
industry, or a repairer of a pre-existing device. 

The Court: They won't concede that is the sole 
and exclusive issue, so we can't save time. I was 
going to save time by getting together on an agree- 
ment as to what the Court had to decide. 

Mr. Meserve: I think your Honor perhaps un- 
derstands, although we did not express it in as 
precise manner as it should be, that what we mean 
is that we are not bound by the language [71] using 
the word "make" as an admission of the manufac- 
ture, or the word "repair" as an admission by the 



76 United States of America vs. 

Government that that is the exclusive function of 
those two words, as an example. 

Mr. Jewell: That's right. What I intend to mean 
is that there are certain other factors besides the 
particular process described in these photographs 
and the testimony appearing below. For instance, 
the manner of advertising, the manner of securing 
customers, and those sort of things, go to make the 
Plaintiff a manufacturer or not a manufacturer. 

The Court : I think it is a concrete question ap- 
plicable to each taxpayer whether he is a manufac- 
turer or simply a repairman. 

Mr. Jewell: That is correct. I believe the cases 
so hold. 

The Court: Proceed. 

Mr. Meserve : We next offer, your Honor, Plain- 
tiff 's Exhibit 2— is it, Mr. Clerk I 

The Clerk: Yes. 

Mr. Meserve: Picture 2, with the legend. 

The Clerk: Plaintiff's Exhibit 2. 

Mr. Meserve: Your Honor, we introduce the 32 
separate exhibits that pictorially, with the legend, 
set forth the story of the business as nearly as we 
can abbreviate it. Wouldn't it be better if we waited 
a moment [72] and let the Court acquaint himself 
with the whole legend; then the rest of the testi- 
mony will be far more intelligible? 

The Court: I think so. I have looked over these 
casually. 



J. Leslie Morris Co., Inc. 11 

J. LESLIE MORRIS 

called as a witness by and on behalf of the Plain- 
tiff, having been first duly sworn, was examined and 
testified as follows: 

The Clerk: You will state your name to the 
Court. 

The Witness: J. Leslie Morris. 

Direct Examination 
By Mr. Meserve: 

Q. Mr. Morris, you are an officer of the Plain- 
tiff corporation? A. I am. 

Q. In what capacity? A. President. 

Q. You were the responsible person for its 
organization, of the J. Leslie Morris Company? 

A. Yes, sir. 

Q. When was it incorporated? 

A. It was incorporated in 1925. 

Q. Was that at the time that you commenced 
the business that you are now in ? 

A. No, we had been in the business two or three 
years prior to that time. 

Q. Then you have been in the business of re- 
babbitting [73] connecting rods since '22 or '23? 

A. About 1923. 

Q. And you have been continuously engaged in 
that business since that date? 

A. Continuously. 

Q. Your principal place of business is in this 
city? A. Yes. 

Q. You have how many other places that you 
perform this service? 



78 United States of America vs. 

(Testimony of J. Leslie Morris.) 

A. At the present time we have one other, Chi- 
cago. We have branches, but where we perform the 
operation. I might say New T York and Columbus 
also do some rebabbitting. 

Q. Do you have other branches throughout 
around the United States? 

A. Affiliated with our company, yes. 

Q. Are you familiar, Mr. Morris, with the ex- 
hibits that have been introduced in this case, Plain- 
tiff's Exhibits 1 to 32, inclusive, the pictures'? 

A. Yes. 

Q. And are you familiar w r ith the legend that is 
recited under each picture ? A. Yes. 

Q. And that fairly, in brief form, correctly re- 
cites the method by which connecting rods are 
treated through your plant from the time they ar- 
rive until the time they are ready to leave, is that 
correct? [74] A. Yes. 

Q. The pictures were taken as of the present 
time ? A. Yes. 

Q. What difference, Mr. Morris, is there in the 
method of rebabbitting as indicated in the pictures, 
Plaintiff's Exhibits 1 to 32, than the method of 
rebabbitting used in 1932 to 1935, the period in- 
volved in this case? A. They are the same. 

Q. The procedure? 

A. The process was the same. 

Q. Was substantially the same? A. Yes. 

Q. Were the devices exhibited in the pictures, by 
which each operation was had, substantially the 
same ? A. Yes. 



/. Leslie Morris Co., Inc. 79 

(Testimony of J. Leslie Morris.) 

Q. Briefly, Mr. Morris, will you tell us your 
method of doing business as distinguished from 
the mechanical method — do I make myself clear? 

A. A large percentage of the connecting rods 
that are brought to us for rebabbitting come from 
automotive wholesale jobbers. These jobbers have 
in their establishments a stock or shelving of con-_ 
necting rods that have been either rebabbitted by 
ourselves or by other companies performing the 
same service to what we term the industry. These 
connecting rods are exchanged in order to give im- 
mediate service. It is merely to facilitate service. 
Now, then, the whole- [75] saler, after making the 
exchange, sends the rods to us to be rebabbitted. 
That is one phase. Another is that on the later 
model rods, the rods that the jobber or ourselves 
probably do not have in stock, — those are sent to us 
by the wholesalers to be rebabbitted, and in this 
instance, we would send the same rods to them 
exactly that they send to us, because of the late 
model, or their inability to have a service or to 
exchange them, or because of the cost, or anything 
of that sort ; we rebabbitt the same connecting rods, 
and send them back to the customer. Does that 
answer you ? 

Q. Mr. Morris, you also do business with such 
organizations as, for example, the Howard Motor 
Company, who are California distributors of the 
Buick automobile, do you not ? 

A. Yes, we have done that. 



80 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. And for J. V. Baldwin Company? 

A. Yes. 

Q. Who are the distributors for the Chevrolet? 

A. Yes; and for Paul Hoffman. 

Q. And the Paul Hoffman Company who are 
distributors for the Studebaker? 

A. That's right. 

Q. Just explain to us, Mr. Morris, what occurs 
when, we will say, you receive, as an example, 12 
connecting rods from the Howard Automobile Com- 
pany — Buick connecting rods. 

The Court: May I interpose? 

Mr. Meserve : Yes. [76] 

The Court: Are those connecting rods new, or 
have they been used? 

The Witness: The connecting rods that are sent 
to us, sir? 

The Court: Yes. 

The Witness: The connecting rods are sent to 
us; they are rods that have been removed from an 
automobile which is being repaired at that time. 

The Court: And are they from automobiles that 
have been used for transportation? 

The Witness: Yes, in every case; so far as we 
know, in every case. Of course, we can instantly 
determine a new connecting rod that had never been 
babbitted before. 

The Court: Mr. Meserve 's question may be pro- 
pounded. 



/. Leslie Morris Co., Inc. 81 

(Testimony of J. Leslie Morris.) 

(The question referred to was read by the re- 
porter, as follows) 

"Q. Just explain to us, Mr. Morris, what 
occurs w T hen, we will say, you receive, as an 
example, 12 connecting rods from the Howard 
Automobile Company — Buick connecting 
rods.") 

The Witness: They go through the process that 
is shown in the pictures there, and are returned 
to the Howard Company. Now, in the event that the 
Howard Company was in a big hurry, and we had 
the particular rod already in stock, babbitted, which 
came from a similar automobile, similar Buick car, 
because they will not interchange — should we have 
that and Howard was in a hurry, he would prob- 
ably say, ' ' Give me an [77] exchange on that today. 
I need this one quickly/ ' But very rarely that we 
exchange them. 
By Mr. Meserve: 

Q. Mr. Morris, start from the genesis of your 
business, the beginning of your business of rebab- 
bitting used connecting rods — start from the first 
part of your business, if that can be done, before 
you build up the supply for exchange. 

A. For at least two or three years after starting 
in our business of rebabbitting connecting rods, we 
did not own a single connecting rod. They were 
brought to us, we babbitted them and returned them 
to the customer that brought them to us. 



82 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. The identical rod? 

A. The identical rod. We would get them in 
groups. We had no exchange service at all at the 
beginning of our business. Later that came in as 
a part of the business, just to expedite the repair 
operation on automobiles. 

Q. In other words, Mr. Morris, do I understand 
it to be a fact that as your business grew, from its 
beginning, where you rebabbitted connecting rods 
and returned them to the customer and delivered the 
identical rod received, rebabbitted, — as your busi- 
ness grew you acquired certain definite brands of 
connecting rods, such, as for example, the Chevrolet, 
Ford, Studebaker, or the well known makes of auto- 
mobile or automobile motors'? [78] 

A. We found that was necessary to give the 
service that the trade demanded. 

Q. By that you mean this, if I can state it cor- 
rectly: An employee of J. V. Baldwin comes to you 
with two connecting rods for rebabbitting, of a 
given size. If he does not want to wait, and you 
have them in stock, you hand him two connecting 
rods that have been rebabbitted, is that correct, and 
take his two which he brought in in exchange, and 
charge him for the rebabbitting? 

A. That is right, if you will eliminate the phrase 
"of a given size," because if it is of a special size 
we have to give the same connecting rods back • they 
have to be rebabbitted. 

Q. I merely intended to use "size" as standard 
in size. 



J. Leslie Morris Co., Inc. 83 

(Testimony of J. Leslie Morris.) 

A. The standard size, yes. 

Q. When you say " standard size/' you mean 
the size of the connecting rods used in motors 
strictly used in the industry? 

A. Yes, the size that originally came in the car. 

The Court : I want to develop that. 

The Witness: I am sorry. 

The Court: I don't think it's your fault. Let us 
take the type of automobile — any type ; say the type 
in 1937, for illustration. Have the types of the 
construction upon which you work been changed 
annually, or at intervals I [79] 

A. At intervals. 

Q. Let us take any of those cars, so as not to 
advertise any of them particularly, any of those 
standard makes of automobiles, of 1937 type. Sup- 
posing one of those cars was in the repair shop and 
it was necessary to secure one of your appliances. 
Just how T will that be brought about? Suppose the 
automobile needs repair of the part as to which 
you fabricate an instrumentality; just explain the 
process. 

A. The garagemen, or wherever the automobile 
is being repaired — the repairer, let us say, of the 
automobile, would bring in a connecting rod. It is 
a common practice ; that happens dozens of times a 
day. The connecting rod that he has received from 
the automobile he brings in to our establishment, 
and we babbitt it, if we have none we can exchange 
for it, or, in many instances, they demand we bab- 



84 United States of America vs. 

(Testimony of J. Leslie Morris.) 
bitt the same one and return it or, if they are in 
a hurry, and would like for us to exchange it, and 
we have one in our stock that was removed from a 
car identical with the one he has brought us, then 
we make the exchange. 

The Court: So there are some instances where 
you supplant the connecting rod that is to be re- 
paired with a connecting rod that has been thereto- 
fore repaired from another vehicle? 

The Witness: From another vehicle of exactly 
the same make, the same year, that used the same 
connecting rod. 

The Court: But an instrumentality that was in 
a [80] separate vehicle entirely from the one from 
which the connecting rod that was brought in by the 
repairman was taken? 

The Witness : Yes. We look at it on an exchange 
basis. 

By Mr. Meserve: 

Q. Mr. Morris, rebabbitting, or the babbitt is 
the wearing surface of the bearing, isn't it, on a 
connecting rod?' A. Yes. 

Q. It is the wearing surface? A. Yes. 

Q. The same as the sole of your shoe is the wear- 
ing surface of your shoe ; that is the bearing of your 
foot, is that correct? A. Yes. 

Q. And babbitting is replacing the wearing sur- 
face of a soft metal back in the bearing of a con- 
necting rod, isn't that correct? 



J. Leslie Morris Co., Inc. 85 

(Testimony of J. Leslie Morris.) 

A. That is correct. 

Q. And in the early days of the automotive in- 
dustry, when automobiles were rare, and were lux- 
uries instead of necessities, that function was per- 
formed in a great many instances, and in nearly all 
instances, in the garage itself, or in the establish- 
ment of the car manufacturer, when they had a 
burned out bearing! A. Yes. 

Q. They rebabbitted it by hand in their own 
shop? [81] A. Yes. 

Q. When they were repairing the automobile? 

A. Yes. 

Q. And as the industry grew, it has become a 
specialty ; rebabbitting has taken that function away 
as a part of the garageman's duty? A. Yes. 

Q. For the sake of speed, and a better finished 
wearing surface; isn't that correct? 

A. That is correct. 

Mr. Jewell: If the Court please, I request that 
counsel for the Plaintiff not make his questions 
quite so leading. 

Mr. Meserve: I don't intend to lead the witness, 
your Honor, in anything that I cannot establish by 
an indirect question, except and only for the pur- 
pose of brevity and clearness. 

Q. Mr. Morris, so that we may have before us 
a physical look at a connecting rod, do you have 
one in the courtroom here? A. Yes. 

Q. Can you produce it for us? 

A. Yes, sir. 



86 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. You have here a box, Mr. Morris, of an 
assembly of several connecting rods. Will you assist 
us by selecting from them any one connecting rod, 
and describe it for us? 

A. The connecting rod I have in my hand is a 
rebabbitted [82] rod for a Packard automobile. 
This is the identical rod as removed from the 
Packard, that probably the exchange would be for. 
This was removed because the babbitt was worn. 
When this car is repaired, they bring it over to 
us, and we either rebabbitt the same one or make 
an exchange. 

Q. That is, if you have a particular rod of the 
same size in your establishment? 

A. Yes, the same diameter, width, and all; if it 
happened to be the same connecting rod, and also 
a definite distance from the crank shaft up to the 
wrist pin. In other words, we can only use a con- 
necting rod made by the car manufacturer. These 
are both connecting rods made by Packard. It is 
just a case of which one was presented to us, 
whether we exchanged it or whether we put it 
through the shop and babbitted it. The result is the 
same. 

The Court: This internal annular member, that 
is not cast with the shaft itself ; it is separate ? 

The Witness : It is a separate operation, sir, even 
at the factory. 

The Court: Supposing the ring, — I will call it 
the ring, — the annular metallic member itself 



J. Leslie Morris Co., Inc. 87 

(Testimony of J. Leslie Morris.) 

The Witness: The shaft? 

The Court: I am speaking of this member as 
distinguished from the outer frame, the inside ring, 
the metallic-like annular member, do you under- 
stand? 

The Witness: Yes. [83] 

The Court: I don't know whether I explained 
it in trade parlance. 

The Witness: You do. Might I say that this is 
not separate. This is all machined; all a part of 
the same forging. That is just the action of the 
cutting edge around there. This is not a bearing. 
That is inserted. 

The Court: That answers the question. 

The Witness: Another rod would not show it 
that way. 

Mr. Meserve : Your Honor, may I be so rude as 
to interrupt, and have these two identified before 
we go to two more, so that we may know what we 
are talking about? 

The Court : Yes, these may be identified. 

Mr. Meserve: We will identify the rod without 
the babbitt as Plaintiff's Exhibit next in order. 

The Court: Of the Packard. 

The Clerk: Plaintiff's Exhibit 33. 

(The rod referred to was received in evidence 
and marked "Plaintiff's Exhibit No. 33.") 

The Witness : They are both Packard connecting 
rods. 



88 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Mr. Meserve: And the rod that has been bab- 
bitted? 

The Witness : That was a babbitted flange 

The Court: Just wait a minute until we get it 
identified. 

The Clerk: Plaintiff's Exhibit 34. 

(The rod referred to was received in evidence 
and marked "Plaintiff's Exhibit No. 34.") [84] 

The Court: Now, Mr. Meserve, you have these 
two rods here, and we will mark these now, Mr. 
Hansen. 

Mr. Meserve : Mark the one that is not babbitted 
as the next exhibit in order. 

The Court: These are the Buick construction? 

The Witness: Exactly. 

The Clerk: Plaintiff's Exhibits 35 and 36. 

(The rods referred to were received in evi- 
dence and marked " Plaintiff's Exhibits Nos. 35 
and 36," respectively.) 

The Court: Do you desire to explain something 
about the construction of this that will clarify what 
is in the Court's mind? 

The Witness: Yes. 

The Court: Will you do so? 

The Witness: The Buick, this 

The Court: Let us avoid the use of the word 
"this," and "those," and refer to them here by 
the exhibit number, if we can. Each one of these 
instruments will now be marked. You will find it on 



J. Leslie Morris Co., Inc. 89 

(Testimony of J. Leslie Morris.) 
the tag, Mr. Morris, if you will refer to those re- 
spectively. 

The Witness: Exhibit 35 represents a connecting 
rod, and it is probably removed from the vehicle. 
The babbitt, you will observe, is damaged. That con- 
necting rod would have given further service, and 
probably was removed because of piston ring trou- 
ble. It was probably pumping oil, and the [85] 
mechanic gets into the automobile to correct the oil 
pumping, which is a very common act of the garage 
service, and in opening up this, he finds it is cracked. 
Exhibit 35 represents a connecting rod which would 
probably be an exchange. As a matter of fact, this 
one was offered to us in exchange for Exhibit 36, 
which is the identical connecting rod, both carrying 
the name of the manufacturer. 

By Mr. Meserve : 

Q. Mr. Morris, may I interrupt just a minute so 
that we can get the story seriatim in our minds? 

A. Yes; probably I am not making it clear. 

Q. That is all right. Will you just explain, so 
we will all have it clear, the function of the con- 
necting rod, first. 

A. The connecting rod connects the piston which 
carries the energy from the cylinder when the 
charge of gas and air are exploded in the cylinder. 
The connecting rod delivers the energy to the crank 
shaft. 

Q. The lower end of the shaft, that is babbitted, 
is the circular part that is attached to the crank 
shaft of the motor? A. Yes. 



90 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. And the upper end, which you are holding 
in your hand, Plaintiff's Exhibit 36, is the part that 
attaches onto the piston? A. Yes. [86] 

Q. And is known as the wrist pint 

A. No, it is by means of the wrist pin that the 
piston is attached to the connecting rod. 

The Court: I believe you stated that 35 would 
probably be exchanged? 

The Witness: Yes. 

The Court: Why would that be true? 

The Witness: Because of the break in the bab- 
bitt at the point near the edge. 

The Court: Why would it not be repaired and 
the identical instrument sent back to the customer? 

The Witness: Purely from a matter of service 
and speed. It would take probably three-quarters of 
an hour to babbitt the same connecting rod. 

The Court: But it could be rebabbitted and 
work efficiently in the motor vehicle from w T hich it 
was originally taken? 

The Witness : Yes, because in many instances we 
do rebabbitt the same rod and it goes back and 
functions efficiently hi the vehicle from which it was 
removed. 

Mr. Meserve: I perhaps think, your Honor, that 
we haven't got the matter entirely clear, either for 
the record or for the Court. 

Q. The connecting rods that are brought in to 
you for babbitting, Mr. Morris, are not in any way 
unusable for the same motor from which they have 



J. Leslie Morris Co., Inc. 91 

(Testimony of J. Leslie Morris.) 

been removed, or an identical [87] motor of the 

same type, are they? A. No. 

Q. Except and only for reservicing the wearing 
portion of the bearing, which is babbitted? 

A. Yes. 

Q. And that is one of the common failures in 
automotive operation? A. Yes. 

Mr. Jewell: If the Court please, just for the 
purpose of keeping the record, because the Govern- 
ment is interested in these types of cases, not so 
much in this particular case, except as it represents 
a type of case all over the country, and with the 
type of examination which is leading, Mr. Meserve 
has induced the witness to state two things which 
are exactly contrary to each other. 

Mr. Meserve: I have no intention of making 
contrary statements. 

Mr. Jewell: I know you haven't, but for the 
purpose of clearing up the record, I think he should 
confine his examination to a little bit more direct 
questioning, because the witness answered yes to a 
question that the rods were in no way unusable, and 
then he added the qualifying phrase, except insofar 
as the babbitt had been melted, or was non-usable. 
I think it will clutter up the record, unless the ex- 
amination is kept in more direct questions. 

The Court: I think leading questions should be 
avoided, [88] especially with an informed witness. 
I take it the witness understands the process thor- 
oughly. 



92 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Mr. Meserve : There is no doubt about that, your 
Honor. 

The Court: He probably understands it better 
than counsel or the Court; and if the questions are 
direct, he will impart to the Court his knowledge, 
without any leading questions. 

Mr. Meserve : The point I had in mind, I thought 
it was indicated just at the close of your Honor's 
last remarks — the impression was left with me that 
the Court thought these connecting rods that were 
brought in were in some way damaged, and that 
only occasionally one could be repaired and sent 
back. 

The Court: It is rather an unsafe thing for 
counsel to exercise the powers of divination as to 
what the Court thinks. 

By Mr. Meserve : 

Q. Mr. Morris, you have here, as I understand 
it, a series of connecting rods exemplifying the 
process of rebabbitting the same type of rod! 

A. Yes. 

Q. Will you select those, please? 

A. I will be glad to. 

Q. You just put them upon the stand, Mr. Mor- 
ris, and hand me the first rod of your selection. 

A. This is a Chevrolet connecting rod. I had the 
boys take two or three of them together, just as 
they came to us [89] for rebabbitting. The connect- 
ing rod, as it comes to us to be rebabbitted — this is 
a Chevrolet of 1937 type ; Chevrolet-6. 



J. Leslie Morris Co., Inc. 93 

(Testimony of J. Leslie Morris.) 

Q. Are the three that you are discussing the 
same ? 

A. All the same; just removed from a Chevrolet 
1937 automobile. 

Q. Just select one of those so that we can have 
it identified. 

The Clerk: Plaintiff's Exhibit No. 37. 

(The rod referred to was received in evidence 
and marked "Plaintiff's Exhibit No. 37.") 

By Mr. Meserve : 

Q. Plaintiff's Exhibit No. 37, Mr. Morris, which 
you have identified is what, again, for the record? 

A. It represents the connecting rod as it is re- 
ceived from a 1937 automobile, Chevrolet. 

Q. Do you have a way, Mr. Morris, of identify- 
ing that type or make of automobile from an exam- 
ination of the rod itself? 

A. Yes, they all carry a numbering on the 
shank of the rod. 

Q. Do they carry the manufacturer's name as 
an identification mark? 

A. In many instances they do. In some instances 
they do not. 

Q. Do they, on a Chevrolet? [90] 

A. Yes, they do. 

Q. Is it on the rod in question, the one which 
you just introduced? 

A. Frequently, in Chevrolet parts, as well as 
others of that group, you find generally G. M., mean- 



94 United States of America vs. 

(Testimony of J. Leslie Morris.) 

ing General Motors. This one here — that one seems 

to have only the number on it. 

Q. What is the next rod in the series that you 
have before you, and the next process? 

A. I brought this in so that we could follow the 
legend that is on the pictures, and show each oper- 
ation as it took place. 

Q. That is correct. 

A. The next operation, after melting the babbitt 
out of the connecting rod, the old babbitt that is left 
in there, is to tin the connecting rod. That has been 
tinned, and is ready to receive the charge of babbitt 
we are going to pour in there, as described by our 
pictures. There are different stages. 

Q. Is this connecting rod you have handed me 
still a Chevrolet? 

A. A Chevrolet, 1937 car. 

The Clerk: Plaintiff's Exhibit 38. 

(The rod referred to was received in evidence 
and marked " Plaintiff's Exhibit No. 38,") 

The Witness: As described in the legend, the 
next [91] operation is to insert the steel separator 
shims, and then cast the babbitt into the connecting 
rod. The separator shims are placed in there so that 
the connecting rod and the cap will be equally sep- 
arated in two pieces — will be equally open as these 
two separator shims are removed. 

Q. The rod which you have just described is a 
rod for use in a Chevrolet ? A. Yes, 1937. 

Q. The next step in the process 



J. Leslie Morris Co., Inc. 95 

(Testimony of J. Leslie Morris.) 
The Clerk: Plaintiff's Exhibit No. 39. 

(The rod referred to was received in evidence 
and marked "Plaintiff's Exhibit No. 39.") 

The Court: Let me interrupt just a moment. I 
observe on these tags, as you refer to them, certain 
legends and figure at the head of them. Does that 
correspond to the photographs that have been intro- 
duced in evidence ? 

The Witness: No, sir, I am afraid it does not. 
I can readily put numbers on them though. 

The Court : If you did it would facilitate the 
examination, and save our time. If that hasn't been 
done, you may go through it. 

The Witness: The separator shim is now re- 
moved ; the connecting rod has carefully been bolted 
together, and it is now ready to be machined. We 
are now ready to pour the babbitt in the connecting 
rod. 

Q. And your last statement refers to the con- 
necting [92] rod you have handed me? 1 

A. Chevrolet 1937, yes. 

Mr. Meserve: I offer that as Plaintiff's Exhibit. 

The Clerk: 40. 

(The rod referred to was received in evidence 
and marked " Plaintiff's Exhibit No. 40.") 

Mr. Meserve : May I interrupt you, Mr. Morris ? 
And I think, with the Court's permission, it would 
be better to put the rod in first, and then describe 
it by Exhibit number, if I may do that. 



96 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. Now, Mr. Morris, Plaintiff's Exhibit 41, if 
you will describe it. 

A. Represents the next step in the process of 
rebabbitting. We have bored out the babbitt and 
faced the edges of the babbitt so that the rod is the 
proper width. It is a steel flange. We do no facing 
with the rod at all, but we do face the babbitt; 
chamfer the inside. Plaintiff's Exhibit 42 is the 
final step in babbitting the Chevrolet 1937 connect- 
ing rod. Oil grooves have been cut, and the connect- 
ing rod is ready to be installed in the automobile 
from which it was removed, or any other Chevrolet 
of the same year and make. 

(The rods referred to were received in evi- 
dence and marked " Plaintiff's Exhibits Nos. 41 
and 42," respectively.) 

Q. From the last exhibits that have been intro- 
duced, and that you have testified concerning, Mr. 
Morris, can you [93] select one as an example upon 
which you can show us the identification of the 
original producer of the rod, or source of its manu- 
facture % 

A. Practically every one of these 

Q. From one exhibit that is in evidence. 

A. Yes, this is an exhibit. This is a Packard 
number. That is generally accepted in all books, and 
that is a product of the Packard Motor Company. 
It was either made by or for them, because they all 
carry that same number on the shank of the rod. 
This rod is a Buick and "Buick" is very definitely 



J. Leslie Morris Co., Inc. 97 

(Testimony of J. Leslie Morris.) 
marked on there, on both of the rods ; that is, Plain- 
tiff's Exhibits 36 and 35. 

Q. And next to the Buick name! 

A. The Buick trademark. 

Q. Is there anything on the Chevrolet rods that 
is similar! 1 

A. The Chevrolet rod has the characteristic 
number that is always there, and it always has 
"G-. M.," indicating General Motors. I have one 
Chevrolet here that carries another number: C. B. 
463. 

Q. Does that indicate anything to you? 

A. Yes, it does. That is the manufacturer of the 
connecting rod. 

Q. What manufacturer, or do you know? 

A. I do know. Clawson and Bals, of Chicago. 

Q. Who manufacture connecting rods for auto- 
mobiles? [94] 

A. Steel forging; yes; the steel connecting rod 
is forged. 

Q. Mr. Morris, in referring to the identification 
marks that you have just testified to, on the ex- 
hibit before you, as to the Packard and others, how 
are they placed on the shank of that connecting 
rod? 

A. That represents an operation in a drop forg- 
ing plant. The connecting rods are forged from a 
billet of steel. Two dies — and by die, I mean a piece 
of hard steel that is recessed to form half of this 
we see here as the connecting rod, and the other 



98 United States of America vs. 

(Testimony of J. Leslie Morris.) 
side is recessed to form the other half — those two 
are actuated by a press and hammer. We speak of 
that as a drop hammer, because it drops; the same 
operation exactly as a blacksmith does, except they 
do it with dies in the industry; and that forms the 
billet into the connecting rod. It is very heavy 
equipment, and I don't know but one in Los Angeles 
that is capable of doing it. It is just scattered over 
the country — the few people that can drop forge 
in dies the connecting rods used in automobiles. 

Q. The drop forging does not in itself make 
the connecting rod? 

A. No, that makes what we call the blank, and 
from that it is machined. It is placed in heav}^ 
machinery that is necessary to cut this type of steel, 
because it is very tough steel, and ordinary equip- 
ment will not handle it. [95] 

Q. Then do I understand it to be correct, Mr. 
Morris, that the numbering and the identification 
mark of the car manufacturer is in the die in the 
drop forged piece? 

A. Yes, and you then get, as a result, the raised 
figure on the shank of the connecting rod, because 
it is a recessed figure on the die that forms it. That 
gives the result in a raised figure on the shank of 
the rod. I might add that this knowledge of mine is 
simply in observing operations. I have never in my 
life been identified with any drop forge company. 

Q. Now, at any time during the operation of 
your business, Mr. Morris, from the beginning to 



J. Leslie Morris Co., Inc. 99 

(Testimony of J. Leslie Morris.) 

date, have you ever removed from any connecting 

rod its manufacturer's identification mark? 

A. Never. 

Q. Would there be any way to remove, we will 
say, for example, the Packard identification marks 
on Exhibit 33, and replace them with any similar 
type of identification marks, raised ? 

A. No, that would be impossible. 

Q. Of your own, or any other person's selection? 

A. So far as I know, that would be impossible. 

Q. That must be done by drop forging with the 
die in which the billet is cut, from which the rod 
is ultimately [96] machined? 

A. That is correct. 

Q. Now at any time, Mr. Morris, in the opera- 
tion of your business, from its beginning to date, 
have you ever put any identification mark on a rod 
of your own? By that I mean of your own com- 
pany? A. A steel identification? 

Q. An identification mark on a connecting rod of 
your own? 

A. No. I might say we put occasionally, in the 
days gone by — I remember a few years ago, prob- 
ably the late '20's, we had a rubber stamp stamped 
"Moroloy"; it was nothing permanent. The very 
moment it was installed the oil would erase it. 

Q. "Moroloy" is a trade name you have for your 
babbitting process? A. That's right. 

Q. I am asking you if you have ever removed 
from any connecting rod that was in your plant its 



100 United States of America vs. 

(Testimony of J. Leslie Morris.) 
identification marks or numbers, and replaced there- 
on an identification mark of your own, as being a 
connecting rod of your own manufacture. 

A. Never. 

Q. If a person desired to remove the numbers 
or the name, we will say, "Buick" from the ones 
you have in the exhibit, or "G. M.," and certain 
numerals, they could be [97] machined off there? 

A. If they wanted to do it, the simplest way 
would be to grind them off with a circular wheel. 

Q. And it could not be replaced in raised num- 
erals or letters. 

A. Not to any knowledge of mine could it be 
done. 

Q. What would be the only way a person could 
put back on a plain rod any identification mark? 

A. With steel stencils. 

Q. It would cut into the rod instead? 

A. It would cut into the rod instead. 

Q. State, Mr. Morris, whether or not each con- 
necting rod that comes into your plant, retains the 
original identification marks that were on it, 

A. All connecting rods that come into our plant 
retain the original identification mark that was 
on it. The caps and the shank portion of the con- 
necting rod are kept together. One cap is never 
placed on another connecting rod. 

Q. Just explain to us what you mean by "cap" 
and "shank," — those portions of the connecting rod. 

A. That is detached to allow it to be placed 



J. Leslie Morris Co., Inc. 101 

(Testimony of J. Leslie Morris.) 
around the crank shaft. What we speak of as the 
cap — I am describing Plaintiff's Exhibit 33 — this 
cap is machined by the Packard Automobile Com- 
pany, or somebody whom they employ to do it, and 
we must keep the cap and rod at all [98] times 
together. This cap must be put back on the same 
connecting rod, and we rebabbitt it; if I make my- 
self clear. 

Q. Referring to the last statement, Mr. Morris, 
as it relates to the exhibit of the Chevrolet rods, 
you use the same cap on the identical rod that it 
came on? A. We do. 

The Court: Aren't these shanks and caps inter- 
changeable ? 

The Witness : No, sir, they are not machined that 
well. 

The Court: There is a variance between all of 
the different manufacturers? 

The Witness: Yes. 

By Mr. Meserve : 

Q. And there would be a variance between all 
of the connecting rods of the same class of the same 
manufacturer ! 

A. There would be a variance in the same con- 
necting rods in the same automobiles, if I make my- 
self clear; that is, as to width, and all, because they 
have been machined together when they were made, 
and the bolt holes are not always directly in the cen- 
ter of these two widths, so if T take a cap from this 
connecting rod and put it on this, you w T ill very 



102 United States of America vs. 

(Testimony of J. Leslie Morris.) 
frequently find an uneven edge, which interferes 
with your rebabbitting. That is the purpose of keep- 
ing the cap portion and the shank portion of the 
connecting rod [99] together. 

Q. That would be true of the six cranks taken 
out of the same cylinder motor ? 

A. Six comiecting rods you mean to say ? 

Q. That is what I mean. 

A. Taken out of the same motor, yes. 

Q. Mr. Morris, I would like to have you ex- 
plain to us the method by which you do business 
with your customers. I tried to make that clear at 
the beginning, and we were led off into this mechan- 
ical operation. 

A. The customer consists, as I said in the leg- 
end, of three types : The car manufacturer — the car 
agency, I should say; the car agency, the industrial 
account, and the automotive wholesale merchant. 
The automotive wholesale merchants probably give 
us 85 per cent of the rebabbitting business that we 
enjoy. 

Q. Can you give us an example of an automotive 
wholesale merchant by name % 

A. Yes, Chanslor & Lyon Company — Chanslor 
& Lyon Stores, Inc., I believe is the exact title. 
Colyear Motor Sales Co.; and one that is known 
by all of us, the Western Auto Supply Company. 

Q. Give us the process of your business relation 
with any one of those customers. 

A. Their truck will come up to our door and lay 



J. Leslie Morris Co., Inc. 103 

(Testimony of J. Leslie Morris.) 

off a package of connecting rods for rebabbitting. 

Those rods [100] are checked in. 

Q. You don't need to describe that, 

A. That is shown in the legend. I was going to 
say the connecting rods are rebabbitted and returned 
to the customer. 

Q. And w T hat charge is made ? 

A. For the rebabbitting charge only. 

Q. You referred in the early part of your testi- 
mony, Mr. Morris, to an exchange. I want you to 
clarify that. Explain what you mean when you make 
an exchange with your customer. 

A. The connecting rod is brought to us for re- 
babbitting. If the customer is in a hurry and wants 
it quickly, and we happen to have a connecting rod 
from identically the same type of automobile — by 
type, I mean make and model and year — then, in- 
stead of delaying him for the time necessary to bab- 
bitt his own connecting rod, that he brought 
to us, we hand him an exchange connecting 
rod, which is exactly the same thing except 
that we have babbitted it previously, and 
already have it on hand. The charge is 
exactly the same for rebabbitting it or exchanging 
it. We make no additional charge for the service of 
exchanging the rod. If he wants his own connecting 
rod babbitted and given back to him, or if he wants 
to accept the exchange which we have to offer, the 
charge is exactly the same. 

Q. How do you acquire, Mr. Morris, the connect- 



104 United States of America vs. 

(Testimony of J. Leslie Morris.) 

ing [101] rods that you have rebabbitted, that you 

have waiting to exchange ? 

A. We bought the earlier ones. Of course, we 
have bought no earlier ones now for many years; 
we bought them from established agencies. They 
secured the earlier type of rods from car wrecking 
establishments, when they had been removed from 
the automobile. They get them together and select 
them, and we buy them at so much apiece. The con- 
necting rod that we are always more in need of than 
those obtainable is the late type of connecting rod, 
as for instance, as we sit here, the 1939 or the 1940 
Chevrolet connecting rods are very much in demand. 
We find it necessary to go to the J. V. Baldwin 
Company and buy 100 or 200 connecting rods for 
our stock. We not only have to stock ourselves, but 
we have to stock the jobber who is depending upon 
us, or the automotive merchant who is depending 
upon us to service him in the connecting rod re- 
babbitting exchange business. 

Q. Then you buy these new from J. V. Baldwin, 
as a dealer? 

A. It comes to us in the original package, in the 
case of General Motors, from J. V. Baldwin. Occa- 
sionally we buy from Felix, another Chevrolet deal- 
er, and they come in original boxes. 

Q. You stock them on your shelves ? 

A. Yes. [102] 

Q. That is a babbitted connecting rod f 

A. We get it babbitted by the factory ; it is a com- 
plete connecting rod. 



J. Leslie Morris Co., Inc. 105 

(Testimony of J. Leslie Morris.) 

Q. You take that new Chevrolet connecting rod, 
and do what with it, when one of your customers 
comes in with a used one ? 

A. We exchange it, sir, with our regular charge 
for rebabbitting that connecting rod, just the same 
as if we rebabbitted it ourselves. 

Q. And the one that is exchanged, the one that 
is brought in, you rebabbitt it and put that in stock ? 

A. Yes, we put that in stock. 

Q. And repeat the same operation on the next 
rod that comes in of the same type ? 

A. Yes. May I interject a thought? We repeat 
it over and over to the extent that we have never 
purchased connecting rods to be rebabbitted in vol- 
ume. They won't even represent five per cent of 
our monthly sales of rebabbitting. 

The Court: Read that. 

(The record referred to was read by the reporter, 
as follows:) 

"Q. And repeat the same operation on the next 
rod that comes in of the same type ? 

"A. Yes. May I interject a thought? We repeat 
it over and over to the extent that we have never 
purchased connect- [103] ing rods to be rebabbitted 
in volume. They won't even represent five per cent 
of our monthly sales of rebabbitting.") 

The Witness: I think I had better clarify that. 
The purchase of connecting rods for rebabbitting 
represents less than five per cent of our rebabbitt 
service to wholesalers. 



106 United States of America vs. 

(Testimony of J. Leslie Morris.) 

The Court: And the other ninety-five per cent is 
largely exchange? 

The Witness: That is it. They ship rods to us, 
and we ship them back. 

The Court: That is a little beyond what I had 
in mind. How much of that ninety-five per cent is 
included in the delivery to your customers of a new 
rod that you have obtained from someone who deals 
in new rods % 

The Witness : Five per cent ; just about five per 
cent of our monthly sales. 

The Court : The other ninety-five per cent would 
consist of taking the used and damaged rod and 
processing it, as you have described, and deliver- 
ing that identical rod so processed back to your 
customer ? 

The Witness: No, sir; not the identical rod; a 
rod exactly like it. 

The Court: That is what I am talking about. 

The Witness: Yes. Not the identical rod, but a 
rod exactly like it. [104] 

The Court: How much of the approximately 
ninety-five per cent of your volume is brought about 
by delivering to the customer the identical rod which 
you got from him, after having processed it in your 
establishment? 

The Witness: I would say — of course, it will 
vary from time to time, but year in and year out 
I would say it would average possibly 15 or 20 
per cent. 

The Court: Then at 60 or 65 per cent — let us 



J. Leslie Morris Co., Inc. 107 

(Testimony of J. Leslie Morris.) 
put it in the larger figures— would consist of the 
delivery to your customer of a rod that had either 
been processed in your establishment, or a new 
rod that had been obtained by you from one of these 
dealers ! 

The Witness : That is exactly correct, yes, sir. 
By Mr. Meserve : 

Q. Mr. Morris, when a rod is brought in to your 
establishment from one of your customers that is 
bent or broken, in any part of it, do you use it? 

A. We cannot accept it for rebabbitting. Our 
catalog and our price sheet both stipulate that 
cracked, bent, or broken connecting rods cannot be 
accepted for exchange, and we return them to the 
sender. 

Q. Then to that extent you do not in your busi- 
ness use damaged connecting rods ? 

A. We cannot. 

Q. The connecting rod, as a connecting rod, must- 
be in perfect condition, except and only as to the 
wearing, bearing [105] surface which you babbitt? 

A. The babbitt liner which goes in between the 
crankshaft and the connecting rod, yes. 

Q. Any other deviation than that is rejected? 

A. It makes it unfit for further service, yes. 

Q. Either for rebabbitting that rod or for the 
replacement of one of like kind ? 

A. We send it back to the customer that sent it 
to us, because it is unfit for further service. 

Q. Then in your place of business, Mr. Mor- 
ris, you do nothing in any way to repair a connect- 



108 United States of America vs. 

£ Testimony of J. Leslie Morris.) 

ing rod other than the babbitt in the lower end of 

the shank? A. That is correct. 

Q. You don't attempt to align them or straighten 
them? 

A. The rod is straightened in the process of bor- 
ing it. We bore it in parallel with the pin. The rod 
is held on the wrist pin. That simulates the wrist 
pin, when it is in service, and the tool that bores 
through this, as shown in the legend, is bored par- 
allel to this hole. If there was a slight bend in the 
connecting rod, it would still be parallel. 

Q. I don't think you followed my question. Look 
at Plaintiff's Exhibit 36. Had that rod come into 
your plant with a bend in the shank 

A. We couldn't use it. [106] 

Q. Let me finish, — would you straighten it in 
your plant, — the bend in the shank? A. No. 

Q. Or repair any other similar type of damage? 

A. No. 

The Court: The connecting rod — to simplify it 
— is made up of two units ; the shank, and what do 
you call the other? 

The Witness : The cap. 

The Court : Your work is exclusively on the cap 
part of that device ? 

The Witness: No sir, we babbitt this part, be- 
tween the shank and the cap. 

The Court: You include that shank, do you? 

The Witness: This is separate at this point, and 
these two bolts hold them together. This cap would 



J. Leslie Morris Co., Inc. 109 

(Testimony of J. Leslie Morris.) 

be detached. I have one here. You see the break 

line? 

The Court: Yes. 

The Witness: We babbitt both sides, of course. 

By Mr. Meserve : 

Q. Mr. Morris, it is required to babbitt the en- 
tire circular inside portion of the crankshaft, the 
upper part of the shank and cap, in order to make 
a complete bearing surface ? 

A. The connecting rod? 

Q. The connecting rod, I mean. [107] 

A. Yes, it is necessary to babbitt the entire cir- 
cumference of the bearing. 

The Court: If the shaft were bent, why wouldn't 
you straighten it, true up the device ? 

The Witness : Because a connecting rod is a very 
important part of the engine, and failure of the 
connecting rod means not just the replacement of 
that connecting rod, but invariably it means that 
the entire engine has to be replaced, because in 
breaking, they almost always are thrown to the side 
of the engine. We have instances of that at all 
times. So we never attempt to correct an imperfec- 
tion in the connecting rod itself for fear of the re- 
sponsibilities that it entails with the customer. 

The Court: Supposing there was a torque, or 
strain, or a stress on the shank of the rod, and the 
result was that the rod was bent, not broken; there 
was no fracture in the metal, but there was a bend- 
ing of the metal, and only in a small degree, but in 



110 United States of America vs. 

(Testimony of J. Leslie Morris.) 
a large degree mechanically and from an engineer- 
ing standpoint, would you service that part of the 
rod? 

The Witness: I might say, sir, that that would 
be corrected when the piston was attached to the 
rod. There is a practice of aligning the connecting 
rod and piston just before they are installed into 
the cylinder. We don't have this device; that is in 
the garage. In other words, the service that you 
mention is a part of the garageman's [108] service 
in installing the connecting rod in the engine, rather 
•than in our place, where we are babbitting it. To 
correct that slight bend that you speak of, that is 
a service of the garageman. 

We have in each garage a fixture known as an 
aligning jig, and that aligning jig is employed after 
the piston has been attached to this end of the con- 
necting rod, and I think the slight irregularity that 
you refer to would be corrected at that time with 
just an ordinary lever bending it, that goes with 
the aligning jig; but we are not called upon to do 
it ourselves at all. 
By Mr. Meserve : 

Q. Mr. Morris, if in going through the operation 
of rebabbitting, in your plant, a connecting rod was 
discovered to be out of alignment, as indicated by 
the Court in a previous question, w r ould you proceed 
to then rebabbitt it, if it was bent ? 

A. No, our catalog states definitely that we do 
not, and will not. 

Q. You do not 



J. Leslie Morris Co., Inc. Ill 

(Testimony of J. Leslie Morris.) 

A. We do not rebabbitt a bent rod, no, sir. 

Q. Or one that is out of alignment, as you see it % 

A. Yes, as we observe it from the eye, because 
we do not check for alignment. 

Q. What, Mr. Morris, is your method with the 
customer, take, for example, who is outside of the 
city of [109] Los Angeles, at Fresno, who writes 
and asks you to ship him so many of a specific type 
of connecting rod that you have rebabbitted and 
have on your shelf? What is your method? 

A. The method of shipping those — we ship the 
connecting rod, and make a charge for rebabbitting. 

Q. What other charge, if any, do you make ? 

A. We require a deposit, which is carried as a 
deposit charge, which will be refunded when the 
forging, which we haven't charged him for, is re- 
turned to us in exchange. 

Q. You require a deposit on what % 

A. On the connecting rod. We charge merely for 
the bearing when we ship it to him, and we send 
him the connecting rod itself ; therefore he makes a 
deposit, which stands on our books until he has re- 
turned the connecting rod that he has received from 
the automobile, to us. In other words, if he comes 
to our counter and says, "Let me have a 493 con- 
necting rod," which is our Exhibit 36, in the par- 
lance of our stockbook and our handling of the con- 
necting rod, and he brings none with him at all, we 
charge him a deposit until the exchange connecting 
rod which is acceptable to us for rebabbitting is 



112 United States of America vs. 

(Testimony of J. Leslie Morris.) 

brought to us. Now, on our Fresno question 

Q. Let me stop you a minute. When you say you 
charge him a deposit, you charge him a deposit for 
the price of the rod, and make him a separate 
charge for the rebabbitting 1 [110] 

A. That's right; for the sake of speeding up, 
we frequently combine the tw T o, but in that instance 
we use the word "complete," which indicates he has 
a deposit on the connecting rod itself. 

Q. Then what occurs if you later receive from 
this customer a rod of a similar type ? 

A. We immediately issue him a credit for the 
full amount of the deposit. 

Q. The full amount of the deposit or the cost of 
the rod, is that it? 

A. Yes. We show T a deposit charge opposite each 
rebabbitting quotation. 

Q. What does that deposit charge represent? 

A. It represents the value of the connecting rod 
itself, as we determine it on the basis of supply and 
demand at the time. In going through our book you 
will find a great many of them with the valuation 
of 10 cents for the reason that they are no longer 
desirable ; they are obsolete. They were used in cars 
that have long since passed from the highway, and 
in many instances we suggest to them that we would 
just as soon sell them the rebabbitting, connecting 
rod and all, instead of bothering to send the old con- 
necting rod back, because it is for an obsolete car 
which is no longer used on the highway. 



J. Leslie Morris Co., Inc. 113 

(Testimony of J. Leslie Morris.) 

Q. Then the amount of deposit is dependent 
upon the current demand for that type of connect- 
ing rod? [Ill] 

A. Yes. On the other hand, if it was a very late 
connecting rod, we would probably charge as much 
as $12.00. In the late Packard, like I have in my 
hand, it is unobtainable except from the Packard 
place, and you pay $12.00 when you go to buy it. 
So they range from ten cents to that. 

Q. That is the current unit charge for the con- 
necting rod? 

A. Yes, what we can get the agent to duplicate 
the rod for in the event the customer did not send 
it back. 

The Court: You referred to obsolete rods that 
come to the establishment. What do you mean by 
to " obsolete rod"? 

The Witness: I mean a rod that was built by 
the manufacturer, as an instance, in an automobile 
that has now long since been consigned to the scrap 
heap. For instance, let me cite for example possibly 
a 1913 Jewett, or possibly, if your memory goes 
back so far, to a Crit, or Corbin, and some of the 
cars that we knew at the beginning of the automo- 
bile industry, that have no value now because they 
will fit no other automobile except the one it was 
intended for. That is why we speak of it as obsolete. 

The Court: What do you do with that obsolete 
rod that you took in the course of trade ? 



114 United States of America vs. 

(Testimony of J. Leslie Morris.) 

The Witness: Unless we had one, and we don't 
usually have these obsolete ones ; we have long since 
sold them to the junkman, and he has hauled them 
away; there is no purpose of babbitting them any 
more; the opportunity of selling them [112] is too 
remote. 

Q. Then you do not sell any of those rods that 
you have characterized as obsolete ? 

A. No, sir, we have no market for them. 

Q. I can't understand why a charge is made, 
then, on account of an obsolete rod. 

A. I will explain that. The wholesaler we send 
rods to sometimes carries a rod of that type in 
stock. You understand that 10 cents was not ar- 
rived at automatically — just instantaneously; the 10 
cents, through the years, has probably decreased in 
value from $1.50, maybe two or three dollars ; maybe 
five dollars. Fifteen years ago say a rod that is now 
carried for ten cents was probably worth five or six 
dollars. The wholesaler, when he has these in stock, 
we, of course, ask him to send them in before they 
have lost their value, because in the business we are 
in, we have to protect the wholesale merchant a 
great deal, and that is why we carry the valuation 
down rather than write it off entirely. We feel it 
is his obligation if he fails to send it in at any time 
during its downward course, and he retains it in his 
stock. Do I make myself clear*? 

Q. You make yourself clear, but I don't under- 
stand just why you take a device that is obsolete 



J . Leslie Morris Co., Inc. 115 

(Testimony of J. Leslie Morris.) 

in the conduct of your reconditioning business. It 

depends upon what you mean by obsolete. 

A. I mean by that we don't babbitt it and put it 
back [113] in stock. 

Q. Would you junk it ? 

A. Yes, we would probably throw it out the win- 
dow, so generally it will ultimately be sold as junk. 
It is not worth rebabbitting again. We have prob- 
ably two or three we have been caught with, and 
would be glad to get rid of it because we are unable 
to sell the babbitting surface on it any longer. 

Q. These devices would be infinitesimal, the ob- 
solete devices that you take in in your business? 

A. I don't exactly like the phrase that we have 
taken them in. We take them in only when we get 
an opportunity to sell one which we had in stock. 

Q. By " taken in," I just meant to emphasize 
what you have stated in several other words. 

A. Yes. 

Q. Did I do it correctly ? 

A. You did it correctly, yes. I understand. 

Q. You spoke earlier in your testimony about 
putting a rubber stamp on the inside of this babbitt 
that would come off when the lubrication occurred. 
What was that; a patented process you have? 

A. No, just a trade name. We did not put it on 
the babbitt, but stamped it on the shank, and we 
only did it for, I imagine, 60 days. We found it did 
no good; it did not stay on the rod at all. It was a 
pure experiment, I understood [114] Mr. Meserve's 
question to refer to the practice way back in the 



116 United States of America vs. 

(Testimony of J. Leslie Morris.) 
'20 's which really indicated it was babbitted by us. 
It was a rubber stamp, with red ink on it, that in- 
stantly came off, washed off, and there was no pur- 
pose of using it further. 

Q. During the applicable period in this case — 
you know what I mean ? A. Yes. 

Q. — did you put a mark of any kind upon the 
instrument that you processed ? 

A. We never put on any kind. 

Q. You spoke about some catalog. You had some 
prospectus of your activity? A. Yes. 

Q. You have that here in court? A. Yes. 

(Thereupon, at 12:00 o'clock noon, a recess was 
taken until 2:00 o'clock p. m. of the same date.) 

[115] 



Los Angeles, California 

Tuesday, May 28, 1940 

2:00 o'Clock P. M. 

J. LESLIE MOREIS 

the witness on the stand at the time of recess, having 
been previously duly sworn, resumed the stand and 
further testified as follows : 

Direct Examination 
(Continued) 
By Mr. Meserve : 

Q. Mr. Morris, you have called to my attention 
since the adjournment, corrections which you desire 



J. Leslie Morris Co., Inc. 117 

(Testimony of J. Leslie Morris.) 
to make in your testimony, your answers in re- 
sponse to questions this morning; first, as concern- 
ing your business ; will you state what that was that 
you wanted? 

A. I was asked a question, I believe, as to where 
we have branches. I was a little confused. This is 
my first time on the witness stand. I said New York, 
Columbus and Chicago. I forgot entirely Seattle 
and Portland. I would like to supply Seattle and 
Portland in addition to that. 

Q. You wanted to correct your testimony, did 
you, as to what else you did to the connecting rod, 
other than rebabbitt it ? 

A. You asked me the question: " Eebabbitting is 
the only thing that you do to the connecting rod?" 
And I said, "Yes." As a matter of fact, the legend 
and the pictures show [116] that we push a new 
bushing into the upper end of the connecting rod; 
so I want to correct that. 

Q. You are pointing to the small end of the 
connecting rod, Exhibit 34 ? 

A. On Exhibit 34. 

Q. And you had a third note ? 

A. The Court asked me about straightening or 
aligning the connecting rod, and he asked me: "Do 
you?" and I took it in the present tense, and I 
answered "No." That statement is correct so far as 
it goes, but I forgot we were talking about periods 
six or seven years ago, so I want to correct that 
to say that we attempted to construct three or four 



118 United States of America vs. 

(Testimony of J. Leslie Morris.) 
different little devices for aligning the connecting 
rod. One was a little electric attachment that had a 
light, and if the rod was misaligned, when wt put 
it on there, the light would burn. That we found 
was an unnecessary operation, because if we did 
align the connecting rod, the garageman or mechan- 
ic later has to attach the piston to this connecting 
rod before he can install it in the engine. 

The very first operation he has to do when he at- 
taches the piston to the connecting rod is to align 
the whole assembly, because, after all, the alignment 
is not so much between the parallel axis and the 
shaft, but between the perpendicular wall of the cyl- 
inder, the piston standing down there perpendicu- 
larly at right angles to the axis of the crank shaft ; 
so the operation w T e were doing we found had to 
[117] be repeated before the connecting rod could 
be installed in the engine, so there is no need for 
us to do it in our place. I want to make that cor- 
rection. 

Mr. Meserve: Mr. Reporter, will you be kind 
enough to read the Court's question and the witness' 
answer which appears on page 93 of your notes? 

(The record referred to was read by the reporter, 
as follows: 

"The Court: Then 60 or 65 per cent — let us put 
it in larger figures — would consist of the delivery 
to your customer of a rod that had either been pro- 
cessed in your establishment, or a new rod that had 
been obtained by you from one of those dealers? 



«7. Leslie Morris Co., Inc. 119 

(Testimony of J. Leslie Morris.) 

"The Witness: That is exactly correct, yes, 
sir.") 
By Mr. Meserve : 

Q. Now, is that answer correct, Mr. Morris, as 
you reflect on it % 

A. That is a little confusing. I don't know yet 
just exactly what the Court wanted on that point. 
I am just a little confused. Maybe if you would read 
the question previous to that it would help me. 

Q. With your Honor's permission, I think I can 
clear up the witness' mind what the Court was seek- 
ing information on. What per cent, Mr. Morris, of 
rods used in your business are new rods or rods 
that you purchase and repair [118] and place in 
stock for service ? 

A. What per cent of what, sir ? 



Q 

A 

Q 

A 

Q 

A 



Of the total volume of your sales business. 
About five per cent per month. 

And the remaining 95 per cent 

Now, I am following you. 
— consist of what ? 



The remaining 95 per cent of our business 
consists of connecting rods that we receive, babbitt 
and return to the customers. I say customers col- 
lectively, because I don't want to leave the impres- 
sion that the connecting rods go directly to the same 
parties who sent them in. In other words, if we re- 
ceive in this morning's shipment from five or six 
different jobbers, let us say, seventy-five Chevrolet 
connecting rods, this afternoon or tomorrow morn- 



120 United States of America vs. 

(Testimony of J. Leslie Morris.) 
ing those shipments will go back; the 75 connect- 
ing rods will be of the Chevrolet type; that is, of 
the same 75 that came in the previous morning, the 
75 connecting rods will be on their way back to the 
six or seven or eight or ten customers I mentioned, 
but I wouldn't say that the identical Chevrolet rod 
that came from one customer goes back to that same 
customer, because they are all exactly alike. Unless 
we put some mark on them, it would be physically 
impossible for us to tell who they came from, ex- 
cept we have the others waiting in the stockroom to 
go out. 

Q. The five per cent of the total of the 100 per 
cent [119] based on your total sales represents con- 
necting rods that you purchase either new from 
automotive representatives, or second-hand ones 
from people who deal in second-hand rods'? 

A. Yes, sir. 

Q. That is, both together total five per cent? 

A. Both together total less than five per cent, I 
might say. 

Q. And that five per cent of your total business, 
Mr. Morris, is occasioned by what practice? 

A. What makes it necessary % 

Q. Yes. 

A. Demands from jobbers who haven't yet, or 
wholesalers who haven't been able to stock their 
shelves with the late type of connecting rods, and 
they depend on us to ship them to them. You men- 



/. Leslie Morris Co., Inc. 121 

(Testimony of J. Leslie Morris.) 
tioned this morning Fresno. If the wholesaler in 
Fresno we are speaking of, has an order which 
comes over his counter for a set of '40 connecting 
rod exchanges, he has the old connecting rods, but 
the garageman has brought them in to him; he is 
in Fresno, and he wants as fast service as he can 
get on them ; so he immediately wires us — telegraphs 
us or phones us to ship him these connecting rods. 
I ship them to him, but in that turnover I am com- 
pelled to buy the late connecting rods to the extent 
of the less than five per cent of the total babbitting 
I mentioned. [120] 

Q. Then, if I understand it correctly, the five 
per cent of rods you are obliged to purchase, both 
of new and second-hand, represents the lag or space 
of time that it would require the rods that come in in 
the morning to go through and be babbitted, and 
be back out on the shelf. Is that correct ? 

A. That is right. You might call it the slack. 

Q. To take up the slack? A. Yes. 

Q. It is a fact, is it not, Mr. Morris, that in many 
instances, or in some instances, you do rebabbitt 
and deliver back the actual rod received from the 
customer? 

A. In a great many instances. 

Q. And that represents about what per cent of 
the total? 

A. Let us say 10 per cent, because usually those 
rods that go directly back to the customer arise from 
the instructions that are on the order. Frequently 



122 United States of America vs. 

(Testimony of J. Leslie Morris.) 
they say, "Same rods back." On other occasions 
they are machined — babbitted by us; the babbitt 
is poured to a size to fit a particular crankshaft that 
has been ground, so a standard rod would be useless 
to them; so naturally we babbitt the same rods and 
send them back to them. 

Q. And it is also occasioned, is it not, from un- 
usual types of rods, such as come out of tractors 
and large Diesel motors I [121] 

A. Yes, that's right; expensive rods. There are 
some connecting rods — for instance, some rods we 
babbitt for three or four dollars each, which the cost 
of the rod alone would be around forty to buy the 
rod outright ; but nobody wants to do that. Our files 
are full of letters — they have even wired, for a cer- 
tain type of rod, and we write or wire right back, 
"Unable to secure. Send us rods in for rebabbit- 
ting." We can't give service on those rods, because 
they cost too much, and we can't expect the turn- 
over of those we receive in exchange. 

Q. Mr. Morris, is there a distinction in the auto- 
motive industry, and your particular branch of it 
in particular, between a damaged or injured con- 
necting rod and one that is worn? 

A. Definitely. 

Q. What is the distinction? 

A. The one that is merely worn requires re- 
babbitting. The one that is damaged— what is the 
other word you used — damaged or ? 

Q. Or injured. 



J. Leslie Morris Co., Inc. 123 

(Testimony of J. Leslie Morris.) 

A. Or injured, why, it's not fit for further 
service. 

Q. A worn connecting rod that comes into your 
plant for rebabbitting can operate in an internal 
combustion motor? A. Yes. 

The Court: Cannot be, you say? [122] 

Mr. Meserve: Can. 

The Witness: It can operate, yes. 

Q. The rebabbitting is for building up the bear- 
ing so it will operate more efficiently? 

A. Preserve the oil pressure, and things of that 
sort. It will function. In fact, I suppose 95 per cent 
of the automobiles that pass this building right now, 
the bearings are too loose, but they are still run- 
ning just the same. 

j Q. Can you tell us, Mr. Morris, when you are 
buying connecting rods, to meet this five per cent 
that you have defined, approximately what the aver- 
age cost of those connecting rods is; not the new 
one, but the second-hand one — about what the aver- 
age cost is? 

A. The average cost would be in excess of $1.00, 1 
would say; possibly $1.50. I haven't prepared fig- 
ures on that, so I would guess between $1.00 and 
$1.50 would be our average cost. 

Q. What would be the range of cost of the popu- 
lar types? 

A. From $1.00 to $3.50. 

Mr. Meserve: Mr. Jewell, do you care to have 
any further evidence on that? I am merely asking 



124 United States of America vs. 

(Testimony of J. Leslie Morris.) 
you. We have here specimen invoices, if you would 
like to have them in the record on this phase of the 
evidence. Pardon me, your Honor, I should have 
asked permission to address counsel. [123] 

Mr. Jewell: Will the Court permit me to ex- 
amine these a moment? 

Mr. Meserve: It is merely to substantiate the 
statement of fact made by the witness. 

Q. Mr. Morris, I will show you what appear to 
be invoices addressed to the J. Leslie Morris Com- 
pany, a group of them, and ask you to examine 
them and tell us what they are, please. 

A. These are invoices for connecting rods pur- 
chased from Mr. LaVine, a gentleman who deals in 
this type of commodity, and I recognize it. He is so 
familiar with us down there that he uses the name 
"Pete," but we all know him as Mr. LaVine. It 
represents sales to us of connecting rods to be re- 
babbitted, which are other than for'and new. They have 
been removed by like establishments, or by some- 
one from where he secures them, and carefully se- 
lected to see that there is nothing wrong with them, 
because when we are paying $1.90 or $1.60 

Q. Mr. Morris, will you answer the question? 

A. Yes. That is what they are. 

Q. Look through the group of invoices I have 
handed you, and advise us if that is a fairly rep- 
resentative type as to cost. 

A. Yes, it is. 

Q. Of the rods that you purchased to fill in the 
five per cent of the rods that you rebabbitt. [124] 



J . Leslie Morris Co., Inc. 125 

(Testimony of J. Leslie Morris.) 

A. Second-hand rods, yes, sir, that is correct. 

Q. What, Mr. Morris, would be the approximate 
average weight of a connecting rod that would be 
of a popular type ? 

A. I would say the average weight would be 
around two or two and a half pounds each. 

Q. The smaller ones, of course, are lighter than 
the larger ones'? A. Yes. 

Q. But those that you purchase in the five per 
cent will average 

A. Two or two and a half pounds each. 

Mr. Meserve: We will offer the invoices to- 
gether, as one exhibit. 

The Clerk: Plaintiff's Exhibit 43 in evidence. 
(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
43.") 



,,-V 



/t 



12C 



ORDER No. 



DATE. 



.19. 






SHIP TO__ 



i 



AT 



HOW SHIP 
TERMS 











nr-*, 



<^7 



imiuj states chcwi coum 

FOR THE NINTH Clfl 

EUJBD 

MAR 2 7 1941 

PAUL P. OBRIEr 

CLERK 



/. Leslie Morris Co., Inc. 127 

(Testimony of J. Leslie Morris.) 

Mr. Meserve: And with the right, Mr. Jewell, 
if we elect, subject to the approval of the Court, to 
substitute copies in lieu of the originals, if we 
would like to keep them in our permanent record. 

Mr. Jewell: That is perfectly acceptable to me. 

By Mr. Meserve : 

Q. Are you familiar, Mr. Morris, with the going 
price of junk, that would be junk occasioned by 
damaged connecting rods not further usable, or that 
type of steel, during the period in question? [125] 

A. Yes, I would be. 

Q. What, approximately, was the going price of 
junk? 

A. It was very low at the beginning of this 
period, and it increased, I would say, from eight to 
ten dollars per ton. 

Q. What would you say was the highest price 
junk brought during that period? 

A. Scrap forging steel, is what you mean? 

Q. Yes, scrap forging steel. 

A. I would say the top price would have been 
$11.00 a ton. 

Q. During the course of your business, Mr. 
Morris, you have published a price list for your 
trade of the prices charged for rebabbitting the 
various types of rods? A. Yes, sir. 

Q. I will show you, Mr. Morris, one of the 
earliest in date, and ask you if that is a copy of your 
published price list that was effective as of the date 
that appears on its face. A. That was, yes. 



128 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. Can you briefly for us, Mr. Morris, so that it 
can be made intelligent in the record, define the 
symbols that appear on the inside of the price list, 
by just taking any one item; and those apply the 
same as to all items, except a variance in the price, 
do they not? A. That's true. [126] 

Q. Just explain it. 

A. This is a net price sheet to the wholesaler; 
that is the wholesale merchant, I believe I have 
spoken of him as; stock No. 2, net rebabbitting, 
$1.80; net rod, 50 cents; net complete is the sum of 
the two, $2.30. 

Q. Taking the first item in the first left-hand 
column of the document that you are looking at, 
which is No. 2. That is your stock number? 

A. Yes, sir. 

Q. And you have a catalog that identifies that 
by its stock number ? A. Yes. 

Mr. Meserve: We will offer in evidence as 
Plaintiff's Exhibit next in order the identified price 
list effective May 15, 1931. 

The Clerk: Plaintiff's Exhibit 44 in evidence. 
(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit 44.") 

By Mr. Meserve: 

Q. I show you a similar document that is dated 
effective August 1st, 1932. Would your testimony 
be the same as to that, except that it is a later price 
list? 



J. Leslie Morris Co., Inc. 129 

(Testimony of J. Leslie Morris.) 

A. Exactly the same, yes, sir. That is the price 
list we used at that time. 

Mr. Meserve: We will offer the document that 
was last identified by the witness as Plaintiff's next 
exhibit in [127] order. 

The Clerk: Plaintiff's Exhibit 45 in evidence. 
(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
45.") 

PLAINTIFF'S EXHIBIT No. 45 

Revised 

Confidential Net Prices for Authorized 

Jobbers Only 

Effective August 1st, 1932 

[National Standard Parts Association Emblem] 

Moroloy 

Connecting Rod and Main Bearing 

Rebabbitting 

J. Leslie Morris Co., Inc. 
"Coast to Coast" 

National Rebabbitters to the Automotive 
Parts Jobber 

Moroloy Bearing Service 

Moroloy Bearing Service 
655 W. 55th St. 
New York City 



130 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Moroloy Bearing Service 
69 N. Tenth St., 
Portland, Ore. 

Moroloy Bearing Service 
11 So. Ninth St., 
Minneapolis, Minn. 

Moroloy Bearing Service 
1361 So. Hope St., 
Los Angeles, Cal. 

Moroloy Bearing Service 
162 No. Fourth St., 
Columbus, Ohio 

Moroloy Bearing Service 
296 Ivy St., N. E., 
Atlanta, Ga. 

Moroloy Bearing Service 
606 Santa Fe Drive, 
Denver, Colo. 

Moroloy Bearing Service 
2712-16 So. State St., 
Chicago, 111. 

Moroloy Bearing Service 
2354 Valley St., 
Oakland, Cal. 

Moroloy Bearing Service 
1516 Thirteenth Ave., W., 
Vancouver, B. C. 



J. Leslie Morris Co., Inc. 131 

(Testimony of J. Leslie Morris.) 
Moroloy Bearing Service 

1934 Broad St., 

Regina, Sask. 

Moroloy Bearing Service 
10 So. Davis St., 
Jacksonville, Fla. 

Moroloy Bearing Service 
310 North Laurel St., 
Richmond, Va. 

Moroloy Bearing Service 
1520 Tenth Ave., 
Seattle, Wash. 

Moroloy Bearing Service 
Stock Net Net Net 



No. 


Rebab. 


Rod 


Comp 


2 


1.80 


.50 


2.30 


6 


1.80 


.75 


2.55 


7 


1.80 


.75 


2.55 


12 


2.00 


7.00 


9.00 


14 


3.00 


10.00 


13.00 


15 


4.80 


13.00 


17.80 


17 


1.05 


.25 


1.30 


18 


1.05 


.25 


1.30 


19 


1.05 


.25 


1.30 


20 


1.05 


.25 


1.30 


25 


1.05 


.25 


1.30 



This confidential net price list is issued for the 
convenience of your purchasing department. 



132 United States of America vs. 

(Testimony of J. Leslie Morris.) 

The "Net Rebabbitting ' ' is charged when the old 
rod is offered in exchange. The "Net Complete " 
price is charged when the old rod is not offered in 
exchange, but promised later. The "Net Rod" 
charge is credited upon receipt of the old rod. 

The "Net Complete " charge is also applicable to 
the outright purchase of connecting rods. 

We ask that the exchange rods to cover those sent 
out as "Complete" be returned to us fifteen days 
from date of shipment. 

Connecting rods rebabbitted to specified under- 
sizes are subject to an additional charge of 50^ net 
per rod. 

Defective forgings will not be rebabbitted but 
will be returned to the sender. 

We are equipped to rebabbitt all types of con- 
necting rods and main bearing caps not listed. 

We reserve the right to correct listings of con- 
necting rods sent us for rebabbitting. 

All prices are subject to change without notice. 

Industrial and Special 
Automotive Bearings 

Wholesalers receive 60% discount on special 
bearings 
MOROLOY BEARING SERVICE 

[Endorsed]: Plaintiff's Exhibit No. 45. Filed 
5/28, 1940. R. S. Zimmerman, Clerk. By B. B. 
Hansen, Deputy Clerk. 



J. Leslie Morris Co., Inc. 133 

(Testimony of J. Leslie Morris.) 
By Mr. Meserve : 

Q. That is the one effective 1532. I will show 
you a similar one, Mr. Morris, that is dated effective 
April 15th, 1933, and ask if your testimony would 
be the same as to that. 

A. My testimony is the same as to that, yes, sir. 
That is the net price sheet at that time. 

Q. For the time of the last one ? 

A. Yes, it's the same. 

Mr. Meserve: We will ask the Court to mark 
the one effective April 15, 1933, as the next exhibit 
in order. 

The Clerk: Plaintiff's Exhibit 46 in evidence. 
(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
46.") 

Mr. Meserve: And the one effective September 
24, 1934, as 47. 

The Clerk: Plaintiff's Exhibit 47. 

(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
47.") 



134 United States of America vs. 

(Testimony of J. Leslie Morris.) 

PLAINTIFF'S EXHIBIT No. 47 

Moroloy 

Western Babbittors Association 

Jobbers' Confidential Net Cost Prices 

for 

Connecting Rod and Main Bearing 

Cap Rebabbitting 

Also Net Forging Deposits 

Effective September 24, 1934 

The net rebabbitting is charged when the old rod 
is offered in exchange. 

The net forging price is charged in addition when 
the old rod is not offered in exchange. 

The net forging charge is credited upon return of 
the old rod to us. 

We ask that the exchange rods to cover those sent 
out, be returned us within fifteen days. 

Forgings rebabbitted to specified undersizes are 
subject to an additional charge of 30c each. 

Defective forgings will not be rebabbitted, but 
will be returned to the sender. 

We are equipped to rebabbitt all types of con- 
necting rods and main bearing caps not listed. 

We reserve the right to correct listings of forg- 
ings sent us for rebabbitting. 

All prices are subject to change without notice. 

Form 1-A 

[Endorsed]: Plaintiff's Exhibit No. 47. Filed 
5/28, 1940. R. S. Zimmerman, Clerk. By B. B. 
Hansen, Deputy Clerk. 



J. Leslie Morris Co., Inc. 135 

(Testimony of J. Leslie Morris.) 
By Mr. Meserve : 

Q. These documents that have just been intro- 
duced in evidence, Mr. Morris, were all of the price 
lists [128] published and in effect during the period 
involved in this case, from 1931 to 1934? 

A. Yes, sir. 

Q. I will show you, Mr. Morris, a document 
dated 1932, and ask you to identify it. 

A. This is our sheet that goes to the jobber to 
help him to identify the connecting rod. 

Q. Do you describe it as a catalog? 

A. We call it a catalog, yes. That is the catalog 
in effect at that time. 

Q. I will show you a similar one of 1933. 

A. That is our publication, yes. 

Q. And those were the two catalogs that were in 
effect with and at the same time as the price lists 
and during the time involved in this case I 

A. Yes. 

Mr. Meserve: We will ask that the one of 1932 
be marked as Plaintiff's Exhibit next in order. 

The Clerk : Plaintiff 's Exhibit 48. 

Mr. Meserve : And the one 1933 

The Clerk : Plaintiff 's Exhibit 49. 

(The documents referred to were received in 
evidence and marked "Plaintiff's Exhibits Nos. 
48 and 49," respectively.) 



136 United States of America vs. 

(Testimony of J. Leslie Morris.) 

PLAINTIFF'S EXHIBIT No. 49 

MOROLOY 

Bearing Service 

Bebabbitted Connecting Rods 

1933 

Moroloy Bearing Service 

National Rebabbitters 

Features of 1933!!!! 

Jobber's Inventories Reduced 

Rights and Lefts Now Interchange 

Jobbers need no longer stock both rights and 
lefts to service off-set pressure feed Connecting 
Rods. By our exclusive manufacturing practice, 
developed for 1933 conditions . . . 

Jobbers Now Reduce Inventories 
50% on These Numbers 

Obsolescence Protection 

and 

Stock Control 

Again 1933 conditions demand protection of Job- 
ber's Investments. Moroloy has met the situation 
with an Obsolescence and Stock Control Plan, which 
guarantees complete and continuous protection of 
the Jobber's Connecting Rod Investment. Details 
on request. 



J. Leslie Morris Co., Inc. 137 

(Testimony of J. Leslie Morris.) 

Moroloy Connecting Rods 

Are Centrifugally Bonded and Automatically 

Machined to Duplicate Original Equipment 

Casting 

Moroloy Centrifugally Processed Rods meet en- 
gineering specifications of original car and motor 
manufacturers. 

This process deposits babbitt on the tinned sur- 
face under extreme centrifugal pressure, assuring 
an absolute bond between babbitt and steel, that is 
not obtainable by the old fashioned hand poured 
method. 

Centrifugally processed connecting rods are en- 
dorsed by the Society of Automotive Engineers and 
are used exclusively by the following manufac- 
turers : 

Auburn, Buick, Continental, Cord, Chrysler, De 
Soto, Dodge, Durant, Elcar, Essex, Gardner, 
Graham, Hudson, Hupmobile, Jordan, Kissel, 
Lycoming, Marmon, Plymouth, Ruxton, Studebaker, 
Stutz, White, Willys-Knight, and Windsor. 

"If It's Not Centrifugally Cast— It's Not a Fac- 
tory Duplicate 

Automatic Pyrometers 

To regulate the temperature of rods, tin and 
babbitt, the Moroloy Centrifugal Process eliminates 
human element entirely. Heat control is obtained 
by approved automatic pyrometers. 



138 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Machining and Finishing 

Moroloy machining and finishing is accomplished 
with the same engineering exactness, following 
closely the recommendations and usages of leading- 
original manufacturers. 

Modern high compression engines demand close 
tolerances, both in bearing diameter and width. 
Of equal importance is proper length spacing. 
Moroloy precision tools are automatic in maintain- 
ing exact length dimensions between center of pis- 
ton pin and center of crankshaft. 

Moroloy processed rods are straightened, cleaned 
and serviced with new bolts, nuts, shims and piston 
pin bushings. Oil Clearance allowed. No scraping 
nor reaming required. 

Electrical alignment is an exclusive Moroloy 
feature. 

For Quick, Simple and Proper Installation, 
Insist on Moroloy 

The extra quality built into every rod means 
longer life, trouble free operation and Owner Sat- 
isfaction, the factors most important in building 
your business. 

Service 

Fifteen manufacturing plants, located at strategic 
points over the United States and Canada, render a 
coast to coast service, convenient to every jobbing 
center. Ample stocks at all branches assure same 



J. Leslie Morris Co., Inc. 139 

(Testimony of J. Leslie Morris.) 

day shipment. Telephone and telegraphic orders 

receive instant attention. 



Moroloy Bearing Service 

J. Leslie Morris Co., Inc. 

"Coast to Coast" 

National Rebabbitters to the Automotive 
Parts Jobber 

Owned and Affiliated Stations Operating in the 
following Cities — 

655 West 55th St., 
New York City, N. Y. 

1361 So. Hope St., 
Los Angeles, Calif. 

2354 Valley St., 
Oakland, Calif. 

69 North Tenth St., 
Portland, Ore. 

296 Ivy St. N. E., 
Atlanta, Ga. 

2712-16 So. State St., 
Chicago, 111. 

162 N. 4th Street, 
Columbus, Ohio 

11 So. Ninth St., 
Minneapolis, Minn. 



140 United States of America vs. 

(Testimony of J. Leslie Morris.) 

606 Santa Fe Drive, 
Denver, Colo. 

1516 Thirteenth Ave., W. 
Vancouver, B. C, Canada 

1934 Broad St., 
Regina, Sask., Canada 

10 S. Davis St., 
Jacksonville, Fla. 

1520 10th Ave., 
Seattle, Wash. 

310 N. Laurel St., 
Richmond, Va. 

Table of Contents 
Section Page 

1 Alphabetical Arrangement of Connecting 

Rods with Complete Specifications 1 

2 Alphabetical Arrangement of "Cast In" 

Main Bearing Caps, Listed by Name of 
Motor 18 

3 Numerical Arrangement of Moroloy Stock 

Numbers 20 

4 Numerical Arrangement of Forging 

Numbers 25 

5 Numerical Arrangement of Inter-change- 

able Rods 29 



J . Leslie Morris Co., Inc. 141 

(Testimony of J. Leslie Morris.) 

Special Sizes 

To fit Reground Crankshafts, Connecting Rod 
and Main Bearings are finished to micrometer 
dimensions at an extra charge of seventy-five cents 
(75^) per bearing. This charge is Net and should 
be added after making deduction of regular trade 
discounts. 

Specify exact micrometer size of reground crank- 
shaft. 

Industrial and Special 
Automotive Bearings 

To determine list prices for rebabbitting Indus- 
trial and Automotive Main Bearings (Bronze or 
Steel Backs) and Connecting Rods not listed in 
this hand book : 

Measure length of bearing over all. Bearings un- 
der 2%" diameter and 3" in length, charge $3.50. 
This price is net, not subject to trade discounts. 
Ask for quotations on larger bearings. 

Undersize charge per unit applicable in addition 
if special size. 



142 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Abbreviations: — "C" — Pin clamps in rod. No bush- 
ing. U B" — Pin floats in rod. Bushing used. 
"FFP" — Pin floats in rod and piston. Bushing 
may or may not be used. 

Note — All rods marked thus * are special jobs and 
are not stocked for exchange. Rods not carried 
in stock must be sent in for rebabbitting. Bush- 
ings, shims, bolts and nuts charged for extra on 
all special rods requiring these parts new. Mod- 
ern facilities guarantee the fastest possible 
service. 

Do not accept rods for exchange that are bent, 
cracked or mutilated. 



143 
SECTION I 

ALPHABETICAL LIST 

REBABBITTED CONNECTING RODS 

ARRANGED BY NAME OF MOTOR 

Notice to Salesmen: (1) When old rod is offered in exchange, use Column "A" prices, subject to 
trade discounts. (2) When old rod is not offered in exchange, but promised later, add Column "B" 
prices NET. Upon return of old rod refund Column "B" prices NET. 

"A" "B" 

Stock List Price Net Forging Bearing Size Pin Si«e 

Name Year and Model No. on Rod No. Rebabbitting Deposit Diam. Width and Type 

A. C. F. Bus, 17-30 Pass. 1927-32 HM-64-65 

H-9789 258 6.00 * 2% 2 7/16 V/ A B 

A. C. F. Bus, 17-23 Pass. 1931, 6 Cyl 18090-B 525 3.50 6.00 2y 4 iy 2 lVs C 

A. C. F. Bus, 21-29 Pass. 1931-32, 6 Cyl 15090-B 526 3.50 6.00 2y 2 1% l x /4 C 

Acme 2 Tons, 1927-29 8UD-502 242 3.00 3.00 2y 8 1% 1 B 

Acme 2 Tons, 1928-31 8UD-505 524 3.00 3.00 2y 8 1% % B 

Acme 4y 2 -7y 2 Tons, 1925-31 (oil line 

integral) B5D-501 505 7.50 17.00 2% 3 1% B 

Acme Bus & Truck 3y 2 -6 Tons, 1926-29...7TD-500 425 5.00 10.00 2y 2 1 13/16 iy 4 B 

Acme 7 Tons, 1928-31 26HD-501 631 6.50 16.00 3 2y 8 iy 2 B 

Acme 31/2-7 Tons, 1928-31, 6 Cyl 7TD-500 425 5.00 10.00 2y 2 1 13/16 1% B 

Acme %, 1 Ton, 1926-31, 6 Cyl 9LD-504 163 2.50 2.00 2 V/ 8 .860 B 

Acme 3, 4 Tons, 1929-31, 6 Cyl 20RD-501 527 3.50 7.00 2y 2 1 13/16 1% B 

Acme 2y 2 , 3 Tons, 1929-31, 6 Cyl 16RD-500 615 3.50 7.00 2% 113/16 iy 4 B 

Acorn 1, 2 Tons, 1927-31 8UD-505 524 3.00 3.00 2% 1% 7 /s B 

Acorn 2%, 3 Tons 1927-31 WSE-2 449 5.00 10.50 2% 1% 1% B 

Ajax 1926, 6 Cyl 2120-A-4 

15001 194 3.00 2.00 1% 15/16 % B 

[Endorsed]: Plaintiff's Exhibit No. 49. Filed 5/28, 1940. E. S. Zimmerman, 
Clerk. By B. B. Hansen, Deputy Clerk. 



144 United States of America vs. 

(Testimony of J. Leslie Morris.) 
By Mr. Meserve: 

Q. Taking, Mr. Morris, just for elucidation, page 
3 [129] of Exhibit 49, — and the system used in the 
catalog and the price sheet is the same, regardless 
of the year? 

A. The system used is the same. 

Q. I direct your attention — and this is only just 
to elucidate the whole matter — to Chevrolet 1932, 
six cylinder, on page 3, Section 1, and will ask you 
to explain to us what appears in the next column. 

A. That is the serial number. 

Q. And that is the number, is it, that appears? 

A. On the forging, on the shank of the connect- 
ing rod, yes. That is the number that is raised in 
the die of the connecting rod. 

Q. Then in the next column following that? 

A. The 516 is our stock number. 

Q. And that 516 is the same 516 that appears 
on the price sheet? 

A. Yes, in the net price sheet, 

Q. And that is the adopted plan of the catalog 
all the way through? A. Yes. 

Q. The names appearing in the left-hand corner 
are of the motor manufacturers ? 

A. That's right. 

Q. The stock number that appears in the cata- 
log, and appears in the price sheet, whereabouts 
does it appear in connection with your business? 

[130] 

A. On the end of the box in which we pack the 
connecting rods. 



J . Leslie Morris Co., Inc. 145 

(Testimony of J. Leslie Morris.) 

Q. On the carton in which you ship it ? 

A. On the carton in which we ship it, yes. 

Q. You do not put that stock number at any 
time on the connecting rod itself? A. No. 

Q. Or any other identification mark? 

A. No. 

Q. I believe you testified this morning you did 
not remove any identification mark that appears 
on the rod? A. None whatever. 

Q. And never have? A. And never have. 

Q. Mr. Morris, I will show you a red carton that 
is produced from your business, and ask you if that 
is the carton that you just last referred to in your 
evidence, in which you packed or shipped the re- 
babbitted rods? 

A. This is the carton in which we shipped the 
rebabbitted rods at the time of the period we 
speak of. 

Q. That was what I was going to qualify next. 
That is the type used during the time involved in 
this case? A. Yes. 

Mr. Meserve: We will ask the Clerk to mark 
this as Plaintiff's Exhibit next in order. 

The Clerk: Plaintiff's Exhibit 50. [131] 

(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
50.") 

By Mr. Meserve : 

Q. Referring to Plaintiff's Exhibit No. 50 that 
you have just identified, Mr. Morris, I will direct 



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/. Leslie Morris Co., Inc. 147 

(Testimony of J. Leslie Morris.) 

your attention to a number that appears on the end, 

315, and ask you to tell us what that is. 

A. That is the connecting rod for a Pontiac-6. 

Q. What is 315? 

A. That is the number again that is in our so- 
called catalog and price sheet ; net sheet ; our identi- 
fying number. 

Q. That is your identifying number 1 ? 

A. Yes. 

Q. And, except as to the change in numbers, is 
the system used the same, each number referring 
to the particular type of connecting rod, is that- 
correct ? A. That is correct, yes. 

The Court: What is the inscription, "Fac. No. 
691 "? I am reading from Exhibit 48. Is that the 
factory number*? 

The Witness : That is the factory number that is 
on the shank of the rod. That is the same number 
we have been referring to all the time. 

The Court: The factory number of the original 
manufacturer, whether a Buick, or Chevrolet, or 
what it is*? 

The Witness: The factory number that appears 
on the shank of the rod. Your Honor, that is not 
always the stock [132] number. Sometimes that 
varies, but this number that appears on the shank 
of the rod, we put that merely for identification so 
they will know what rod we are talking about; what 
rod they are to receive ; what rod they will require ; 
because about the first thing a garageman does when 



148 United States of America vs. 

(Testimony of J. Leslie Morris.) 
he takes a rod out is to look at the number; not 
our stock number, but the number on the connecting 
rod itself. He goes to his wholesaler and says, "Give 
me one like that." 

The Court: Is that 

The Witness : That is the factory number. 

The Court : Not your number ? 

The Witness: Not my number. That's right, 
yes. [133] 



HARRY W. PATTIN 

a witness called by and on behalf of the Plaintiff, 
having been first duly sworn, was examined, and 
testified as follows: 

The Clerk : You will state your full name to the 
court. 

The Witness : Harry W. Pattin. 

Direct Examination 
By Mr. Meserve : 

Q. Mr. Pattin, where do you reside? 

A. 2107 Ames Street, Los Angeles. 

Q. What is your business or prof ession ? 

A. I am a certified public accountant, 

Q. And you are licensed to practice your pro- 
fession in the State of California? A. I am. 

Q. How long have you been a certified public 
accountant? A. Since 1925. 

Q. You have performed professional services 
for the plaintiff corporation in this case ? 



J. Leslie Morris Co., Inc. 149 

(Testimony of Harry W. Pattin.) 

A. I have. [142] 

Q. The J. Leslie Morris Company? 

A. Yes. 

Q. When did you first perform any accounting 
services for that corporation ? 

A. In July, 1933. 

Q. And it consisted of what? 

A. At that time I had to go back for about a 
year or a year and a half to audit the books. Since 
then I have prepared the financial statements, tax 
returns, and various other special matters. 

Q. And you made the annual audit ? 

A. Yes, I did. 

Q. And have made your own examination of the 
books of the corporation? A. Yes, I did. 

Q. For the period through the year 1931 ? 

A. Well, not very extensively back of 1931, 
although I did see enough of the books and the tax 
returns to satisfy me that the books were correct. 

Q. I show you, Mr. Pattin, a document entitled 
" Financial Statement, J. Leslie Morris Co., Inc./' 
for December, 1931, and ask you if you can identify 
that document. A. Yes, I can. 

Q. State what it is, please. 

A. This is the balance sheet showing the assets 
and [148] liabilities of J. Leslie Morris Company, 
Inc., as of December 31, 1931. 

Q. That was prepared, was it, before you became 
affiliated, or worked professionally for the com- 
pany? A. Yes, it was. 



150 United States of America vs. 

(Testimony of Harry W. Pattin.) 

Q. But since you have been their accountant, 
you have verified the figures that are indicated on 
that statement, with the books of the corporation, 
and determined whether they are correct or incor- 
rect? A. Yes, I did. 

Q. What did you find in that particular? That 
they were correct ? 

A. Yes, I found they were substantially correct, 
There was one slight change made after a Federal 
auditor examined this, a slight change in the rate 
of depreciation ; not very substantial. 

Q. In the rate of depreciation? 

A. That's right. 

Mr. Meserve : We w T ill offer in evidence the docu- 
ment, identified by the witness as Plaintiff's next 
exhibit in order, being the assets and liabilities or 
financial statement, 

The Clerk: Plaintiff's Exhibit 51 in evidence. 

By Mr. Meserve: 

Q. I will show you a second document, Mr. Pat- 
tin, entitled " Statement of Operations," and ask 
if you can [149] identify that document. 

A. Yes, this shows the result of operations of 
J. Leslie Morris Company for the year from Janu- 
ary 1, 1931 to December 31, 1931. 

Q. Are you familiar with the statement? 

A. Yes, I am. 

Q. Have you verified the figures thereon from 
the books since you have been the accountant for 
the company? 



J. Leslie Morris Co., Inc. 151 

(Testimony of Harry W. Pattin.) 

A. Yes, I know they are based on the books and 
records; taken from the books and records. 

Mr. Meserve: We will offer the profit and loss 

statement, 

Q. This is a profit and loss statement you have 
just identified ? A. That's right. 

Mr. Meserve: — as Plaintiff's next exhibit in 
order. 

The Clerk: Plaintiff's Exhibit 52 in evidence. 
(The documents referred to were received in 
evidence and marked ' ' Plaintiff 's Exhibits Nos. 
51 and 52," respectively.) 

By Mr. Meserve : 

Q. Examine Plaintiff's Exhibit 52, Mr. Pattin, 
will you, and tell us what the result of the J. Leslie 
Morris Company operation was for the year 1931, 
as to whether it operated at a profit or loss ? 

A. It shows a net loss of $3370.07. [150] 

Q. And that includes all of its operations, 
whether here or in any of its various then existing 
branches ? 

A. That's right. That's the entire concern. 

Q. Have you, since observing the result of this 
statement, checked the books to verify whether that 
loss actually existed or not, as shown by the books? 

A. Yes, I did. 

Q. And you found it to be correct? 

A. Yes. 

Q. That it was a net loss of operation for that 
year? A. Yes. 



152 United States of America vs. 

(Testimony of Harry W. Pattin.) 

Q. I will show you another document entitled 
" Financial Statement, December, 1932, " and ask 
you if that document that you are now examining 
is similar to Plaintiff's Exhibit 51, except for the 
year 1932. A. Yes, it is. 

Q. Did you have occasion to verify the figures 
and facts therein contained, from an examination of 
the company's books? A. Yes, I did. 

Q. What did you ascertain? 

A. That these figures were taken from the books 
and records of this company. 

Q. And truly reflect the condition as indicated 
from the books? [151] A. Yes. 

Mr. Meserve: We will offer the financial state- 
ment for the year 1932 as Plaintiff's Exhibit 53. 

The Clerk : 53 in evidence. 

(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
53.") 

By Mr. Meserve : 

Q. I will show you a " Statement of Opera- 
tions," January 1, 1932 to December 31, 1932, and 
ask you if you identify that as being a similar 
statement to Plaintiff's Exhibit 51, except for the 
year 1932. A. Yes, it is similar. 

Q. And have you verified the facts and figures 
indicated on the statement, from the books and 
records of the corporation I 

A. Yes, I did. 

Q. And do they truly reflect the condition of 



J . Leslie Morris Co., Inc. 153 

(Testimony of Harry W. Pattin.) 
the company as indicated by the books and rec- 
ords? A. They do. 

Q. What was the result of the operations of 
the company for the year 1932 ? 

A. A net profit of $4574.73. 

Q. Was that net profit computed on taking into 
consideration the same elements that the net loss 
was determined on the preceding year I 

A. Yes. [152] 

Q. All of the same phases of operation in all 
of the various plants of the company ? 

A. That's right. It is the net result of the en- 
tire corporation. 

Mr. Meserve: We will offer this statement as 
Plaintiff's Exhibit next in order. 

The Clerk: Plaintiff's Exhibit 54 in evidence. 

By Mr. Meserve : 

Q. I will show you a statement: " Balance 
Sheet," dated December 31, 1933, and ask you if 
you can identify that document. 

A. Yes, that is the balance sheet of this company 
as of December 31, 1933. 

Q. Who prepared that? 

A. I prepared this myself. 

Q. From the books ? A. Yes. 

Q. Was there anything else that you did to 
verify it? I assume that you checked against the 
bank records? 

A. Yes, I audited the books. I make a con- 
tinuous audit. I am down there at least once a 
week. 



154 United States of America vs. 

(Testimony of Harry W. Pattin.) 

Q. And that is a correct statement of the com- 
pany as of that period, is it? A. It is. 

Mr. Meserve: We will offer the balance sheet 
for 1933 as Plaintiff's Exhibit [153] 
The Clerk: 55. 

(The documents referred to were received in 
evidence and marked " Plaintiff's Exhibits Nos. 
54 and 55," respectively.) 

PLAINTIFF'S EXHIBIT NO. 55 

J. Leslie Morris Co., Inc. 

BALANCE SHEET 

December 31, 1933 







Los 


Portland 








Assets 


Total 


Angeles 


Seattle 


Chicago 


Columbus 


New York 


* 


* 


* 


* 


* 


* 


* 



[Endorsed]: Plaintiff's Exhibit No. 55. Filed 5/ 
28/1940. R. S. Zimmerman, Clerk. By B. B. Han- 
sen, Deputy Clerk. 



By Mr. Meserve : 

Q. I will show you a profit and loss and income 
statement dated December 31, 1933, and ask you 
if you identify that % 

A. Yes, that's the statement of income, profit 
and loss, for this company, for the year 1933. 

Q. Who prepared it? A. I did. 

Q. From the books and records of the corpo- 
ration ? A. Yes. 



J. Leslie Morris Co., Inc. 155 

(Testimony of Harry W. Pattin.) 
Q. What does the result show for that year? 
A. It shows a net loss of $2258.07. 
Q. And was that based upon the same method of 
calculation of profit and loss that is indicated in this 
statement for the years 1931 and 1932 ? 
A. Yes, it was. 

Mr. Meserve: We offer the document last iden- 
tified by the witness as Plaintiff's exhibit. 
The Clerk : 56 in evidence. 

(The document referred to was received in 
evidence and marked as " Plaintiff's Exhibit 
No. 56. ") [154] 

By Mr. Meserve : 

Q. The statement that I now hand you, being 
balance sheet for the year 1934, your testimony is 
the same as to that, Mr. Pattin, as it was for the 
previous similar statement for the year 1933? 

A. Yes, it is. 

Q. You prepared it? 

A. I prepared it from the books and records. 

Q. And from your audit? 

A. That's right. 

Q. And it is correct ? A. Yes. 

Mr. Meserve: We offer the balance sheet for 
the year 1934 as Plaintiff's Exhibit 57. 

The Clerk: Plaintiff's Exhibit 57 in evidence. 
(The document referred to was received in 
evidence and marked "Plaintiff's Exhibit No. 
57.") 



156 United States of America vs. 

(Testimony of Harry W. Pattin.) 
By Mr. Meserve : 

Q. And I will show you a profit and loss and 
statement of income, December 31, 1934, and ask 
you if your testimony is the same as to that as it 
was to the one previously identified, except as to the 
year. 

A. That's right, This covers the year 1934. 

Q. What does that show as a result of the 
operation ? 

A. It shows a net profit of $5191.86. 

Q. And no different method of calculation of 
income [155] or profit or loss was made in this year 
as against any of the preceding years ? 

A. No change in the method. 

Mr. Meserve: We will offer the document iden- 
tified as Plaintiff's Exhibit. 

The Clerk: 58 in evidence. 

(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
58.") 

By Mr. Meserve: 

Q. I will show you a balance sheet of the cor- 
poration dated December 31, 1935, and ask you if 
that is a similar document, prepared by yourself, 
for that year, as you have testified to as the two 
preceding years. A. Yes, it is. 

Q. You prepared it? 

A. I prepared it after audit from the books 
and records of this company. 

Q. And it is correct? A. It is. 



J. Leslie Morris Co., Inc. 157 

(Testimony of Harry W. Pattin.) 

Mr. Meserve: We will offer the balance sheet 
of December 31, as Plaintiff's Exhibit 59. 
The Clerk : 59 in evidence. 

(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
50.") 

By Mr. Meserve: 

Q. This is a statement of income and profit 
and loss [156] for that same year? A. Yes. 

Q. You prepared that, did you, 

A. Yes, I did. 

Q. From the same method and same form of 
procedure that you did for the years preceding, 
that you have testified to? A. Yes. 

Q. And it is correct? A. Yes. 

Q. What does that statement show as to the 
operations of the company for the year 1935? 

A. It shows a net profit of $6,048.16. 

Q. In your opinion that is correct? 

A. It is. 

Mr. Meserve: We will offer the statement last 
identified as Plaintiff's Exhibit. 

The Clerk: Plaintiff's Exhibit 60 in evidence. 
(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
60.") 

By Mr. Meserve: 

Q. Did you make a calculation as to the per- 
centage of gross profits for the years 1931 and 
1933? A. Yes, I did. 



158 United States of America vs. 

(Testimony of Harry W. Pattin.) 

Q. T will show you a document and ask you 
if that is a memorandum that you prepared in re- 
spect to the matters I [157] have just inquired of. 

A. Yes, this is. 

Q. State what it shows as to the percentages of 
gross profits for those two years, and just what 
you mean by that ! 

A. Well, now, I am comparing 1931 and 1933, 
1931 being the first full year prior to this tax. 

Q. The one involved in this case? 

A. Well, prior to the time this tax became a 
law, 1933 is the first full year after the excise tax 
became a law. The gross profit for 1931 I found to 
be 24.5 per cent for 1933, and the gross profit I 
found to be 19 per cent, or a decrease or a lower 
gross profit in 1933 of 5% per cent. 

Q. And that, in face of the fact that the prices 
charged by the corporation for its services had 
been raised in that period? 

A. Yes, despite that. Of course, I went still 
further to find out what caused this decrease in 
gross profit and it's practically entirely due to an 
increase in the cost of materials. 

The Court: Those two items are the figures that 
should have been included there in the exhibits, I 
think 52 and 52, where you made pencil notations, 
and did not put in the percentages? There are 
some changes here in these exhibits. I am referring 
now to Exhibit 52; there has been a change [158] 
there in the itemization? 



J. Leslie Morris Co., Inc. 159 

(Testimony of Harry W. Pattin.) 

The Witness : Yes, you see, that is one that was 
not prepared by me and the phraseology is differ- 
ent from the kind I would use. 

The Court: Are these items which you gave in 
your testimony last — are they items that should 
be included in these various exhibits? 

The Witness: Yes, those percentage figures are 
based on these figures here. 

Mr. Meserve: Cross examine. 

Cross Examination 
By Mr. Jewell: 

Q. What did you mean, Mr. Pattin, by per- 
centage of gross profit? 

A. Well, if an item sells for $1.00, and costs 
65 cents, I would say the gross profit is 35 per cent. 

Q. That is excluding depreciation, and so forth, 
in your computation? 

A. Well, it excludes selling and administrative 
expenses. It does include labor on a process and 
the material used in the process, and those ex- 
penses directly connected with a process. 

Q. What other items does it exclude? 

A. It excludes selling expenses, salesmen's com- 
missions, salesmen's salaries, packing supplies; it 
excludes all administrative expenses, like general 
insurance, [159] office salaries, officers' salaries, tel- 
ephone, certain taxes, bad debts, office depreciation. 

Q. You say you made an examination of the 
books of the company and found out that the in- 



160 United States of America vs. 

(Testimony of Harry W. Pattin.) 

crease was what? It was due to the increase in 

the cost of materials? I didn't catch that. 

A. The decrease in gross profit was almost ex- 
clusively due to the increase in the cost of mate- 
rials rather than labor or certain of these expenses 
that I charged to the process. 

Q. Are all the books of the various affiliated 
branches of Plaintiff corporation kept in this city, 
at this office? 

A. Not right now. We have changed methods 
several times, but right now we do get copies of 
the books of original entry from the other branches. 

Q. What was the setup when you first started 
to perform professional services for Mr. Morris 
and the plaintiff corporation? 

A. I believe they were all kept in Los Angeles 
at that time. 

Q. Do you recall what the first change was — 
when it occurred? 

A. I believe about four or five months after 
that; that was when they were separated into the 
different branches, and local bookkeepers and local 
accountants were [160] employed then. 

Q. Any other changes? 

A. Well, there have been changes since then. 
Now Los Angeles keeps the records for Portland 
and Seattle. Chicago now keeps the records for New 
York and Columbus as well. 

Mr. Jewell: That is all. 

Mr. Meserve: That is all. 

(Witness excused.) [161] 



J. Leslie Morris Co., Inc. 161 

J. LESLIE MORRIS 

a witness recalled by and on behalf of the Plain- 
tiff, having been previously duly sworn, resumed 
the stand and further testified as follows: 

Direct Examination [163] 

Q. Mr. Morris, in your business, in rebabbitting, 
do you use old babbitt metal? A. Yes. 

Q. As well as new? 

A. As well as new, yes. 

Q. That is, the babbitt that is on the rod as it 
comes in is melted out ? A. Yes. 

Q. And you keep it? A. Yes. 

Q. And add new to it as it is needed, is that 
correct? A. That's correct. 

Q. Introduced in evidence in this morning's ses- 
sion was Plaintiff's Exhibit 37, a connecting rod 
that I understood you to identify as being one to fit 
a particular type of Chevrolet, is that correct? 

A. '37 Chevrolet. 

Q. Are you able to state from an examination 
of Plaintiff's Exhibit 37 who the manufacturer of 
that rod was? 

A. We are more or less familiar with all of the 
markings of the car manufacturers, and also other 
manufacturers than the car manufacturers. This 
rod is marked U C. B. 463." That is the stock num- 
ber of Clawson and Bals of Chicago. [165] 

Q. Will you spell the first name ? 

A. C-1-a-w-s-o-n and B-a-l-s, Inc. 

Q. A concern in Chicago? A. Yes. 



162 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. Are you familiar with their business to the 
extent of having been in their plant ? A. Yes. 

[166] 
By Mr. Meserve: 

Q. In your business, Mr. Morris, did you ever 
at any time purchase connecting rods for their 
value as junk steel or material atoned 

A. I never did. 

Q. The only connecting rods that you ever pur- 
chased [168] were ones that were either new or 
worn at the place where they needed rebabbitting? 

A. Correct. 

Mr. Meserve: That is all. 

Cross Examination 
By Mr. Jewell : 

Q. How many affiliated plants did you say the 
Plaintiff corporation has, Mr. Morris? 

A. Affiliated? 

Q. Or associated. 

A. Do you mean that are not owned by the com- 
pany? Is that what you mean, plants that are not 
owned by the company? 

Q. Over which the company has control, or some 
business connection. Tell me about your corporate 
setup in connection with other organizations doing 
a much similar line of business. 

A. This corporation 

Mr. Meserve: If I can interpose an objection, 
your Honor 



J. Leslie Morris Co., Inc. 163 

(Testimony of J. Leslie Morris.) 

The Court: Subsidiaries and affiliates? 

Mr. Jewell: Thus far it was not brought out 
on direct examination the type of relationship that 
plaintiff corporation has with the other various 
business entities shown on the books. They may be 
subsidiaries; they might not be. I would like to 
know what that connection, or setup, it, [169] 

A. The J. Leslie Morris Company, Inc. owns 
the plants in New York, Columbus, Chicago, Los 
Angeles, Portland, and Seattle. 

Q. New York, Chicago, and Columbus'? 

A. Columbus, Ohio, Portland, Oregon, Seattle, 
Washington. 

Q. And Los Angeles? 

A. Los Angeles, yes — six. 

Q. Those other plants, which you state the 
plaintiff corporation owns, are they corporations? 

A. No, sir, all in the one corporation. 

Q. In other words, you actually own the indus- 
trial unit? 

A. Yes, it's just a part of this California cor- 
poration. 

Q. I notice on some of the exhibits — 52, 53, and 
54, and so forth, the balance sheets, the names of 
some other units: Atlanta, Jackson, Richmond. 

A. Jacksonville, Florida, that is. Those plants 
have been disposed of by the company. They were 
disposed of in — I will have to ask my accountant 
on that; I think it was 1931. 

Q. I am looking at the 1931 return. 



164 United States of America vs. 

(Testimony of J. Leslie Morris.) 

A. Yes. 

Q. I see the name of the Atlanta unit appears on 
the balance sheet for 1932, so you must have dis- 
posed of it [170] some time during the year 1932, 
is that correct*? 

A. I can't answer that, Mr. Jewell. You will 
have to ask my accountant to refer to the books. 

Q. Anyway, you don't own it now? 

A. We do not own it now, no, sir. It was either 
'31 or '2, but I can't remember the exact time. 

Q. These pictures, and the legend affixed be- 
neath, relate your testimony of the process as it 
existed during the taxable period here involved, at 
1361 South Hope, Los Angeles, California. 

A. Yes. 

Q. What line of business is your corporation 
engaged in in New York? 

A. The equipment is much less. 

Q. How about Chicago. 

A. Chicago is better organized, and the equip- 
ment is just about identical with Los Angeles. 

Q. Do you mean identical in size? 

A. The tools, I mean; yes, identical in size. It 
has not the floor area; it is considerably smaller in 
floor area, but the same operations are done, and 
we babbitt just about the same number of connect- 
ing rods there as we do in Los Angeles. 

Q. About what size would you say your shop is 
in Los Angeles? 



J. Leslie Morris Co., Inc. 165 

(Testimony of J. Leslie Morris.) 

A. I think it is 50 by 85, or thereabouts. That 
[171] does not include, of course, parking space 
out in front. 

Q. Is it the largest as to floor space? 

A. Yes, very much the largest one. 

Q. Your physical offices are here in Los An- 
geles ? 

A. Yes, it is a California corporation ; we started 
here. 

Q. What is this establishment that you have 
out here in Boyle Heights? 

A. That is crank shaft grinding and engine 
bearings. 

Q. That is all that you turn out over there? 

A. That's right. 

Q. Do you have any warehouses, outside of the 
particular production units? 

A. Operated by ourselves? 

Q. Yes. A. No. 

Q. Do you store in any warehouses? 

A. We do store in warehouses, yes. 

Q. Will you tell me where those warehouses 
are? 

A. Yes, they are in Boston, Philadelphia — I am 
trying to get them in order so that I won't miss 
one: Kansas City, Minneapolis, New Orleans. They 
are handled by salesmen, and he just works on a 
commission. We have no part of the management 
of the business there at all. 

Q. But you rent the warehouse? 



166 United States of America vs. 

(Testimony of J. Leslie Morris.) 

A. No, merely on a commission. That is the 
usage that [172] obtains in this business very gen- 
erally, that these automotive warehouses are set 
up to supply wholesalers in that vicinity, and they 
are usually operated independently entirely, and 
the rental for the space and the service is based 
entirely on the sales; so much commission on sales. 

Q. Do you mean rent for the space and service 
in the warehouse*? 

A. Yes, receiving stuff, shipping out, and so 
on; they handle it on a commission on sales. 

Q. These salesmen handle them on a consign- 
ment basis? A. Do you mean the warehouse? 

Q. Yes. A. We have only a small stock. 

Q. How many would you say approximately 
you have in each warehouse? 

A. Approximately I would say we probably 
carry, from the largest warehouse stock, which is 
Minneapolis, probably 500 connecting rods to may- 
be New Orleans, which is a small one, 75 or 100. 

Q. Of course, you keep stock at each of these 
other plants, New York, Chicago, Seattle and Port- 
land? 

A. Yes, the necessary stock. Of course, there is 
quite a variance in the volume of business done in 
these places, and the stock is usually in proportion 
to the amount of business done. 

Q. Do you have any idea? Is the stock similar? 

[173] 



J . Leslie Morris Co., Inc. 167 

(Testimony of J. Leslie Morris.) 

A. The stock in Chicago is very similar as to 
the stock I observed as in Los Angeles. In other 
places it probably ranges from half that size down 
to maybe 20 per cent of that size. 

Q. How many employees did you employ in 
your Los Angeles plant during the taxable period? 

Mr. Meserve: I will object to that unless he 
means at any one time. Then I don't know what 
the materiality of it is. 

Mr. Jewell: I will say approximately the aver- 
age during the taxable period, in the Los Angeles 
plant ? 

Mr. Meserve: May I finish? 

The Court: I didn't hear what you said, Mr. 
Meserve, at the end? 

Mr. Meserve: I said if it was at any one time, 
because he could have one man perform the one 
service and quit every day, and still total his num- 
bers. 

Mr. Jewell: I will take an average. 

The Witness: Actually working in the shop in 
Los Angeles here? 

By Mr. Jewell: 

Q. In your whole unit. 

A. That is, both the shop department, office 
and all? 

Q. Yes. 

A. It would range right around 20 a day dur- 
ing that [174] period. 



168 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. Approximately how many of those would be 
in production? 

A. I would say 12 or 14. That would include 
shipping and receiving. 

Q. How about New York? How many approxi- 
mately do you employ? 

A. It employs three people. 

Q. Chicago about the same as Los Angeles? 

A. Not quite as many. I would say 18. If Los 
Angeles had 20, Chicago at that time would prob- 
ably be operating 18. 

Q. Seattle? A. Seattle two. 

Q. Portland! 

A. Three. Correction there ; three in the shop at 
Portland, and the young lady in the office would 
be four. 

Q. In these warehouses which are maintained at 
various points you consign the rods to the salesmen 
there for stock? 

A. Those small stocks that the salesman carries, 
yes, they belong to the company. 

Q. They are consigned? A. Yes. 

Mr. Jewell: If the Court please, I would like 
to confer with counsel for a moment. [175] 

The Court: I will ask a question along that 
line: How is the transaction affected in Seattle, we 
will say, if you only had three employees in the 
shop, or in Portland, I believe you said you had 
two; suppose a man wants to obtain one of these 
processed rods, and he has one that is damaged or 



/. Leslie Morris Co., Inc. 169 

(Testimony of J. Leslie Morris.) 

injured, what is the method of transaction there? 

The Witness : Just the same as here, sir. He 
comes in. Of course, we carry a much smaller 
stock, so we babbitt a great many more in propor- 
tion to the sales there, but the sales are much 
smaller. 

Q. Let us take Boston, where you said there were 
warehouse facilities, but no shops. A. Yes. 

Q. What is the method there? 

A. The rod is exchanged when it is brought to 
the counter. 

Q. What is done with the rod obtained from 
the customer? 

A. It is sent to the nearest branch that is 
equipped to do the work of babbitting. 

Q. There is no way in those places, where there 
is merely a warehouse facility, to obtain back the 
identical processed rod that is delivered to the com- 
pany? 

A. Obtain back for the customer, do you mean? 

Q. Yes. 

A. No, we can't babbitt the rod and give him the 
[176] same one back. We usually make arrange- 
ments, however, with some shop in town to do that 
work for us, because it is very necessary sort of 
thing everywhere, and we have arrangements in 
nearly every city with some machine shop that 
will do that work for us, for an emergency. 

Q. What would be the emergency? 



170 United States of America vs. 

(Testimony of J. Leslie Morris.) 

A. A set of connecting rods would come in to be 
babbitted, let us say undersized, to fit a crank shaft 
that is ground. They couldn't wait to send them all 
the way to Chicago or Boston, so we would have 
to send them out to be babbitted by a machine 
shop in Boston. 

Q. You may or may not have them in stock in 
the warehouse? 

A. We couldn't possibly, because the crank 
shaft varies so much. They merely clean up the 
imperfections in the crank shaft, and stop there, 
so we sometimes have a crank shaft with six dif- 
ferent sizes of connecting rods on it. 

Q. Approximately what size inventory did you 
carry in your Los Angeles plant during the taxable 
period, on an average? 

A. I will have to say I don't know. We have 
the inventory, and I would much rather 

Q. Those books will show then, the audit? 

A. Yes. 

Mr. Jewell: The number of rods? [177] 

The Court: No. Probably it wouldn't show the 
number but it would show the value. 

A. The value, yes. 

By Mr. Jewell: 

Q. You rebabbitt about 400 rods a day down in 
your Los Angeles plant? A. Yes. 

Q. There was introduced a catalog, 1933, which 
you stated you sent around to the various supply 



J. Leslie Morris Co., Inc. 171 

(Testimony of J. Leslie Morris.) 

houses. Is that your method of advertising, — to 

distribute the catalog to the various supply houses? 

A. Yes, to those who are dealing with us. We 
don't usually send our catalog promiscuously to 
everyone, but to those wholesale supply houses who 
are sending their rods to us for rebabbitting ; we 
keep them supplied with information data. 

Q. What methods do you use for expanding 
your business, Mr. Morris, for getting new cus- 
tomers I 

A. Well, in the past we have depended very 
largely just on the service we have rendered. We 
haven't employed a salesman, if that is what you 
mean, for Los Angeles and the Coast plants, and 
the salesmen who represent these warehouse stocks 
we have referred to are rather active in their terri- 
tory in which the warehouse stock is located. It is 
very frequently a combination of the salesmen, and 
a place to carry stock. Of course, he is working for 
a great many [178] other accounts besides ours. 
He is a combination commission salesman, and 
probably represents three or four different auto- 
motive people with services, and he calls on these 
wholesale accounts, but at no particular direction 
from us, because he is independent, on a commis- 
sion. 

Q. Who does the solicitation? 

A. We don't use solicitation at all. These folks 
here I have done business with almost 20 years, and 
I contact them every once in a while on the phone, 



172 United States of America vs. 

(Testimony of J. Leslie Morris.) 
or they contact me. We don't find it necessary. I 
make a trip occasionally around in the machine, 
but it is more or less in the nature of a visit. 

Q. You don't go out and solicit new customers'? 

A. No; there have been very few customers 
who have come into existence in the last few years ; 
among wholesalers, I am speaking of, which, I said 
represent about 85 per cent of our business. 

Q. Is your firm, or are you yourself a member 
of any manufacturers' association? A. No. 

Mr. Meserve: I object to that as immaterial, 
your Honor. I don't know what purpose that can 
serve, whether he belongs to an association of manu- 
facturers, or the Chamber of Commerce, or any- 
thing else. I can't see that that means anything. 

Mr. Jewell: I think the cases have held, your 
Honor, [179] that the whole manner of general con- 
duct of a corporation, how they do business, and 
whether or not they hold themselves out as manu- 
facturers, are all material things. 

The Court: Overruled. 

By Mr. Jewell : 

Q. Are you, Mr. Morris — is your corporation, 
or are you a member of any manufacturers asso- 
ciation? A. Any manufacturers association? 

Q. Or association of people connected with your 
same line of business. 

The Court: Trade association. 

The Witness : Yes, we belong to the L. A. Auto- 
motive Trade Association. 



J. Leslie Morris Co., Inc. 173 

(Testimony of J. Leslie Morris.) 
By Mr. Jewell : 

Q. Any other association ? 

A. Yes, I think the branch in Portland is affili- 
ated with the Automotive Trade Association. 

Q. What type of membership make up the L. A. 
Automotive Trade Association? 

A. Garages, wholesale merchants and suppliers. 

Q. In one of these illustrations the legend states 
that on about half of the rods, in order to prevent 
the nuts and bolts from becoming tinned, it is 
necessary to use auxiliary nuts and bolts while the 
rod is being tinned ? A. Yes. 

Q. And that the rods and nuts and bolts are 
removed [180] and thrown into a box and later 
replaced in the place of the auxiliary nuts and 
bolts? A. Yes. 

Q. When that is done there is no effort to keep 
the nuts and bolts separated so that they go back 
into the exact same car or rod, is there f 

A. No. 

Q. No effort whatsoever? 

A. No. They have to go back to Chevrolet rods 
because they fit Chevrolet rods, but they don't go 
back into the same Chevrolet rod. I might add that 
there is no identification mark on the bolt ; it would 
be very difficult to do it anyway. 

Mr. Jewell: For the purpose of the record, that 
is Plaintiff's Exhibit No. 5 to which I refer. 

The Court: The same bolts, however, and nuts, 
however, that are taken off of the appliance and 



174 United States of America vs. 

(Testimony of J. Leslie Morris.) 
thrown into the receptable, when the process is 
finished, or is completed, so far as that particular 
movement is concerned, are replaced I 

The Witness: Yes. 

The Court: But they might not get into the 
same thread or the same hole ? 

The Witness : That is right. [181] 

By Mr. Jewell : 

Q. I believe you testified on direct examination 
many times that garagemen come to your place and 
leave the rod and come back and pick up the same 
rod. It is my understanding that you very rarety 
do business with garagemen; that all your business 
is with either jobbers or large firms who have truck 
or auto fleets of their own, and dealers ? 

A. That is true. Invariably this garageman 
brings a requisition from the wholesaler. He goes 
to the wholesaler's place and expresses his wishes, 
and wants, and they send him over to our place, and 
he presents a requisition from the wholesaler to per- 
form the work on this rod. 

Q. I understand, Mr. Morris, that some of the 
rods which you rebabbitt need shims, and a certain 
type of rod comes originally with a shim, and when 
you rebabbitt it you remove the shim. Do you re- 
place that shim with a new shim? 

A. We replace it with a new shim. There are 
not a great many rods using shims. Shims are ten 
years or more back, but there are a few rods which 



/. Leslie Morris Co., Inc. 175 

(Testimony of J. Leslie Morris.) 

use shims. When that happens, we put the shim in 

the place of the one we remove. 

Q. Who are these people you speak of, from 
whom you obtain your supply of used rods? Give 
me the name of a few of them. You said Mr. 
La Vine? 

A. Yes, of used rods; A. L. Klein, Chicago, I 
think, sell quite a few used rods. Let me see if I 
can think of another one. Yes, we have a man by 
the name of Wilson here [182] in the city of Los 
Angeles; his initials I cannot give you without ref- 
erence to the book. He brings in some rods occa- 
sionally. 

Q. Does he have a wrecking business? 

A. No, he is a broker, you might say. The rods 
he knows we will buy are rods that have come out 
of insurance wrecks because, in other words, it is 
only a wrecking establishment w T hich handles cars 
that are wrecked on the streets, late model cars 
are usually covered by insurance, and he knows 
what these are, and those we are anxious, for in- 
stance, to buy such as some 1940 Chevrolet connect- 
ing rods. The reason that he gets that type of rod 
is because he knows we will pay more for it than 
a rod back five or six or seven years. 

Q. Is Mr. LaVine also a con. rod broker? 

A. That's right, 

Q. He is located here in the city? 

A Here in the city, yes 

Q. I show you Plaintiff's Exhibit 43, being bills 
from Mr. LaVine, and ask you whether or not 



176 United States of America vs. 

(Testimony of J. Leslie Morris.) 

these numbers on the left, those three digit numbers 

are your code numbers. 

A. They are our identifying numbers in the 
catalog, yes. 

Q. That is the way his bills are made up to 
you? 

A. The way his bills are made up, yes. [183] 

Q. By taking your price sheets, a comparison 
can be established between the price that you pay 
for the old rod and what you get for it ? 

A. That is right, 

Q. I believe you testified that the automobile 
manufacturers also do rebabbitting % A. Yes. 

Q. For their dealers ? A. Yes. 

Q. Do you know whether or not they do re- 
babbitting for anybody else ? 

A. No, I do not. I couldn't answer that, 

Q. Do you know whether or not, when they re- 
babbitt a rod which is sent to them, whether or not 
they treat it as a new rod ? 

Mr. Meserve: I object to that as calling for a 
conclusion of the witness, as to what somebody else 
does with their rods. 

Mr. Jewell: I asked him if he knew, if the 
Court please. 

Mr. Meserve: It is still a conclusion; it is im- 
material. 

The Court : What does that mean, is that treated 
as a new rod % 

Mr. Jewell: Are they sold and boxed— sold at 
the same price that they sell a new rod? [184] 



J. Leslie Morris Co., Inc. Ill 

(Testimony of J. Leslie Morris.) 

The Court: You mean separate and apart now 
from the vehicle that they did sell originally with 
the rod in it? 

Mr. Jewell: Yes. 

The Court: A replacement part, do you mean? 

Mr. Jewell : That is right. 

The Court: Overruled. 

Mr. Jewell: Will you read the question? 

(The question referred to was read by the re- 
porter, as set forth above.) 

The Witness: I would say that most of the car 
manufacturers keep the division of stock divided 
very definitely. The rebabbitted rods in their stocks 
are spoken of and sold as used and rebabbitted rods. 
You will find many requisitions from us to car deal- 
ers which stipulate across the bottom: These must 
be new factory rods; so that's why I know; we 
want to get those rather than rebabbitted rods. 

Q. Have any dealers ever sent you any re- 
babbitted rods ? 

A. Yes, sometimes they have sent some of our 
own, which we have rebabbitted for them. 

Q. That occurred on occasions when you wanted 
to purchase rods to keep your supply built up to 
facilitate your exchange service? 

A. That's right. 

Q. They have shipped you one of your own 
rods? 

A. They have shipped us a great many of them. 
We have [185] got them back many times. 



178 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. Sometimes the rod is rebabbitted by you for 
a Ford or a Chevrolet ? A. Yes. 

Q. So, so far as a sale to a customer is con- 
cerned, they made no distinction between the rod 
which you rebuilt and the rod which was not? 

A. I would say they did, sir; they keep these 
rods that have not been rebabbitted as new stock 
in most cases. Now, I am only speaking of my 
knowledge, that is all; I wouldn't say definitely, but 
my knowledge is that when you want a new con- 
necting rod from the factory you must ask for 
that particular thing, and in a great many instances 
they are not readily obtainable, because they don't 
carry new stock. There is no occasion for it, A rod 
does deteriorate, and they constantly babbitt them 
over; they have for the last ten years or so. Most 
of the car dealers have their rods rebabbitted lo- 
cally; they don't attempt to send them back to the 
factory at all, because they have a lot of freight to 
take care of. 

Q. On those occasions when they send them to 
you in response to one of your orders, when you 
were trying to build up your exchange stock by 
outright purchase of rods from the dealer, when 
they sent them to you, did they charge you the same 
price for those rods which they did for others that 
had not been rebabbitted ? [186] 

A. That would vary with the manufacturer. I 
did not know I was going to be asked these ques- 
tions. I think as a rule the prices are the same. 



J. Leslie Morris Co., Inc. 179 

(Testimony of J. Leslie Morris.) 

Q. Whether they rebabbitt or not? 

A. As a matter of fact, they sell very few con- 
necting rods. It is always the exchange items. When 
they exchange a new one for a rebabbitted one, the 
charge of rebabbitting is just the same. If in a Chev- 
rolet you happen to get a new one you are just 
lucky. That is all in the exchange process. 

Q. I was speaking, and I assume that you were 
speaking, of an occasion not when you were ex- 
changing a rod with one of the dealers which, of 
course, you would not do, but an occasion when 
you had no rod and you needed a rod so that you 
would have one to deliver to one of your customers, 
and you went to the dealer and you made a pur- 
chase, and he gave you, in response to that purchase 
order, when there was none turned in on your part, 
of an old rod — he gave you a rebabbitted rod — at 
that time did he charge you the same price as he 
would for a new one ? 

A. Yes, I think it would be just the same. 

Q. I haven't looked through all your catalogs 
here, and price lists. Do you give any guarantee 
with your product? 

A. Yes, we guarantee the bearing. 

Q. What type of guarantee? 

A. Against defective workmanship and mate- 
rial. That [187] is a very characteristic guarantee in 
this industry. 

Q. When you go to an automobile dealer to pur- 
chase rods, to supply your stock inventory, and 



180 United States of America vs. 

(Testimony of J. Leslie Morris.) 
you purchase new rods, or rebabbitted rods, which- 
ever they deliver to you, could you, if you so chose, 
as part of the price you pay for those rods, give 
to them a used connecting rod ? 

A. Do you mean they exchange rods } 

Q. Yes. 

A. Oh, yes, they exchange rods every day; the 
car dealers do. 

Q. They will exchange them with you as well 
as with anyone else ? A. Oh, yes. 

The Court: When you say, "car dealer,' ' do 
you distinguish dealers in new cars from the others ? 

The Witness: Yes, I always mean the new car, 
sir, because that is the only place w T here there is 
a reservoir of parts kept. Second-hand dealers do 
not carry any new parts at all. I am speaking of 
people like the Howard agency, the Buick agency, 
and the Chevrolet. 

Q. What would be the occasion or necessity for 
the new car dealer to have a rebabbitted connect- 
ing rod? 

A. Because the cost of rebabbitting a connecting 
rod is — I don't know how to get the average, but 
let us say a Studebaker costs, for rebabbitting a 
Studebaker connecting rod about one-third of the 
cost of the whole unit. [188] 

Q. I am speaking of the car that comes from 
the factory to the local salesman, of the new prod- 
uct, what would be the reason for that salesman, 
seeking an exchange of a connecting rod that is in 



J. Leslie Morris Co., Inc. 181 

(Testimony of J. Leslie Morris.) 

the vehicle as it comes to him from the factory — 

what would be the occasion of exchanging that for 

rebabbitting? 

A. It may have failed in the service. I don't 
think you are clear on it. The car dealer, in addi- 
tion to selling new cars, has a parts department, 
where he has the component unit of every one of his 
automobiles over the various years. The usual prac- 
tice in the trade is about three or four years to 
carry all those component units. He is selling them 
every day to the garagemen, even to the consumer 
who wants to install his own frequently, he will sell 
a man a part of his automobile. So the garageman 
can go to a car dealer with a broken connecting rod, 
just as he can go to Chanslor & Lyon, or the West- 
ern Auto Supply Company and exchange the con- 
necting rod with the car dealer. 

Q. That is limited, however, to the stock of the 
individual appliance he has in his business; it does 
not pertain to these used vehicles he sells % 

A. No, the vehicle he sells is a unit of itself. 
The only time one of these connecting rods is ex- 
changed is when there is a failure, and he finds it 
necessary to replace it. 

Q. If one is buying a new car, the presump- 
tion is [189] that he buys it new\ 

A. The connecting rod, and everything that goes 
with it. 

Q. He doesn't buy a revamped connecting rod? 

A. No, definitely no. 



182 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. So he buys what pertains to those in stock, 
not as part of the car, is that right ? 

A. As you buy an automobile, it has, of course, 
all new parts throughout, It is all brand new. Now, 
you can go to the parts department in that same 
car dealership from which you bought the new car. 
The new parts department is not on the sales floor, 
where they sell new automobiles, but it is a parts 
department, where they stock connecting rods for 
that car. A man has a failure of a connecting rod. 
Let us assume that his automobile was purchased 
two or three months previous to the time he had the 
failure of the connecting rod. He can go back to 
the same dealer from which he purchased his new 
car, and offer the connecting rod in exchange, and 
the car dealer will give him an exchange, just the 
same as the wholesaler, for a single unit, 

Q. To replace one that has been damaged or in- 
jured or affected in some way which counsel has 
described ? 

A. Yes. So the car dealer maintains the same 
exchange service as the wholesaler does for the ga- 
rageman. 

(Whereupon, at 4:30 o'clock p. m. an adjourn- 
ment was taken until Wednesday, May 29, 1940, 
at 10.00 o'clock a. m.) [190] 



J. Leslie Morris Co., Inc. 183 

(Testimony of J. Leslie Morris.) 

Los Angeles, California 
Wednesday, May 29, 1940 
. 10:00 O'Clock A. M. 

J. LESLIE MORRIS 

the witness on the stand at the time of adjourn- 
ment, having been previously duly sworn, was ex- 
amined, and further testified as follows : 

Cross Examination 
(Continued) 
By Mr. Jewell : 

Q. Mr. Morris, do you recall in the building up 
of your supply bank of rods, w T hen you purchased 
some of the rods new from people like J. V. Bald- 
win, and so forth, and purchased some of the rods 
on which the babbitt had been worn out, do you 
recall about what percentage you purchased from 
each of each type, the new and the worn out rods? 

A. I would rather refer to the records, but I 
would say roughly about half. 

Q. You testified yesterday that during this par- 
ticular tax period that you used some methods of 
aligning rods. Will you describe that method? 

A. The different ones? There were several dif- 
ferent ones. 

Q. You tried several different methods'? 

A. Yes. 

Q. In other words, you were attempting to align 
[191] rods? 

A. Yes, we were attempting to align rods. 

Q. What were those methods? 



184 United States of America vs. 

(Testimony of J. Leslie Morris.) 

A. We used just the ordinary aligning features 
which are commonly in use in all garages. 

Q. What are they? 

A. They consist of a surface plate, we call it, 
and you place the rod in the middle, and that oscil- 
lates the same as a crank shaft in an automo- 
bile in which it is going to be installed. The idea 
is to have the piston side — the side of the piston 
at right angles to the axis to this member which 
clamps the connecting rod on. It is a little testing 
stand, which is commonly used in garages. 

Q. In these tests, when it was out of alignment, 
how did you realign it ? 

A. In this test, if it is out of alignment, there 
is a tool that comes with it, with the aligning jigs, 
and it looks very much like a wrench, and you give 
it a twist to correct the few thousandths it may be 
out of alignment ; just twist it over beyond the point, 
and it comes back to the point. 

Q. What other method is used % 

A. We always used the same method, except to 
determine if you have gone far enough. It was 
not very successful, the one where we introduced 
the switch; we had a light, and when you got it 
right — it was an apparatus, instead of [192] going 
in with a feeler gauge and checking it, we would 
go in with the light. That was not successful, because 
in the contact with electricity the point burned off, 
and the rod wouldn't be in perfect alignment, We 
realized all of a sudden that the garagemen had to 



J. Leslie Morris Co., Inc. 185 

(Testimony of J. Leslie Morris.) 
repeat the same operation exactly when he attached 
the piston to it, so there was no need for us to 
align them. 

Q. I believe you testified on direct examination, 
when you sold one of your rebabbitted rods to a 
person or company, who did not have any exchange 
rods to turn in, that you charged them for the re- 
babbitting, and also for the shank, but that you took 
the amount of the purchase money allocable to the 
payment on the shank, and placed it in a deposit 
fund ; is that or is that not correct ? 

A. That went in with our general receipt, but 
we wrote up the invoice to show that the rod was 
either used, or the word " complete/' which meant 
they were to collect the refund when they brought 
in the exchange connecting rod. We always do that. 
As a matter of fact, it is all a charge account. We 
don't put it into the fund, because 98 per cent of 
our business is done on open account with the ac- 
count with whom we deal, so there is actually no 
fund. We receive the cash. We receive very little 
cash during the month. Cash comes in in the form 
of checks and is usually paid around the tenth of 
the month following the purchase. 

Q. In that case, when the payment was made at 
the end [193] of the month, you take the whole 
amount and put it in a general sales fund at the end 
of the month? 

A. As a matter of fact, the whole amount 
wouldn't come in, because we would have issued a 



186 United States of America vs. 

(Testimony of J. Leslie Morris.) 
credit against the rods. In most instances, the last 
few days of the month, the payment you make might 
be applicable still during the month. Generally we 
would issue a credit, so the net amount would be 
the only amount which stood on the books. 

Q. When you received payment for the net 
amount on the books, you put it all in one fundi 

A. We put all our receipts in one fund. 

The Court : Do you set up a separate fund to take 
care of the contingencies that might arise on the 
credit you extend generally? 

The Witness: You might say the whole fund 
takes care of contingencies. We do not receive cash. 
The cash we receive is usually for rebabbitting we 
have done for the connecting rod because the cus- 
tomer who has been charged two or three dollars, 
or whatever the book shows, in addition to the re- 
babbitting charge, invariably hastens to get those 
rods right back to you. 

The Court: Would the whole transaction be en- 
tered as one transaction, or as separate items? 

The Witness: No, we always deposit our money 
to the bank account, and issue a credit. 

The Court: I think counsel is trying to get at 
the [194] segregation of those two features of the 
deal, the transaction. 

The Witness: It is practically all bookkeeping. 
We charge out for the babbitting, and the deposit, 
as we call it, to insure the return of similar forg- 
ings that we may have in stock, that charge is placed 



J. Leslie Morris Co., Inc. 187 

(Testimony of J. Leslie Morris.) 
against the account, and invariably before the end 
of the month, within two or three days the corre- 
sponding forging, exactly alike, corresponding to 
the connecting rod, will come back to us for credit. 
In most instances they won't pay the bill unless all 
the credits due on the returned connecting rod are 
applied to the payment. 

The Court: So far as your accounting is con- 
cerned, you set it up as one transaction; you don't 
segregate your potential refund or credit from the 
amount of the sale you make 1 

The Witness: No, we just make a full charge, 
and refer the invoice number to the customer. That 
invoice number states a certain amount against the 
customer, and when we make the credit, we refer 
back to the invoice number, and credit four or six 
connecting rods, and return the refund, two or three 
dollars, or whatever it may be. It is all bookkeeping. 
It is the net amount on the payment the customer 
makes at the end of the month, when he cleans 
it up. 

The Court: I don't know whether that clears up 
what is in your mind. It does in the Court's mind. 

[195] 

Mr. Jewell: I believe it is clear. I would like to 
ask this question : In a case where one of your cus- 
tomers doesn't return as many rods as he has re- 
ceived ; that is, where he has actually purchased not 
only the rebabbitting and the shank and everything, 
and hasn't turned any back, so his net amount at 
the end of the month includes the price for some 



188 United States of America vs. 

(Testimony of J. Leslie Morris.) 

shanks, do you take that net amount and put it into 

one account ? A. Yes. 

Q. And you keep no separate deposit % 

A. No. 

Q. I show you, Mr. Morris, several invoice slips, 
— four to be exact, which are clipped together, and 
ask you to identify them. 

A. That is the invoice as we render it to the 
customer. 

Q. The invoices reading: "Moroloy Bearing 
Service," four of them clipped together, I would 
like to introduce on behalf of the Government. 

The Clerk: Government's Exhibit A in evidence. 
(The document referred to was received in 
evidence and marked " Government's Exhibit 
A.") 




653 V/. 35TH ST. 
NEW YORK. N. Y. 



296 IVY ST.. N E. 
ATLANTA. GA. 



£21 N.W. TENTH AVE. 
PORTLAND. ORE. 



Sold to 






189 



INVOICE 

OROLOY BEARING 5 RVICE 

J. LESLIE MORRIS CO., INC. 



1361 S. HOPE ST. 
LOS ANGELES. CALIF. 



10 S. DAVIS ST. 
JACKSONVILLE. FLA. 



606 SANTA FE DRIVE 
DENVER. COLO. 



1516 THIRTEENTH AVE. W. 
VANCOUVER. B. C. 



2714-16 S. STATE ST 
CHICAGO. ILL. 



310 N. LAUREL ST. 
RICHMOND. VA 



2354-56 VALLEY ST 
OAKLAND. CALIF 



Branch 



1934 BROAD ST. 
REGINA. SASK 



1520 TENTH AVE 
SEATTLE. WASH 



162 N FOURTH ST. 
COLUMBUS. OHIO 



/_ 



Address 



-^- 






Ship to. 



Customer's 
Order No /^ 



QUANTITY STOCK NO. 



DESCRIPTION 




/ 



f 









FOH THH rJiN • 

FJJLJEI) 

MAR 2 7 1941 
PAUL P. O'BRIEN 

CLERK 



Ko ^S^HL^ \ 

VS. 

Clerk] 




THIS IS YOUR INVOICE. WE DO NOT ITEMIZE AGAIN 



wW st accaptao* lor oradit 
late of invoiea 
tssss Mtsss returnad or ioco jut •( sstsg i 
sMs. ■• olaims allowed attar 11 Says fro* date of in voire. 



•adit saltos returnad with our permit! ion. Traaaporlatloa ohargst atatl ' " r\ 1 / f J / ^ X 

ny foots. A W* oharia to oovar handling will be made oa sll roturi.j* * ,w# J- t- W fc- v^ W 
•I SOiag defective or orror on our part. «oodt made to ordar ara unreture- 



2742* NllOItt lALtieOOlt CO.. LINCOIN-CHICIEO 400 H . HICM. *VI PHOWf 1*44 



J . Leslie Morris Co., Inc. 191 

(Testimony of J. Leslie Morris.) 

The Court: These items on the invoices, Exhibit 
A, Mr. Morris, I observe on two of them there are 
items: "Extension" only, and on the others, "Ke- 
bab." What is the difference between those two 
transactions? For instance, [196] the last one has 
under "description," "Complete." 

A. "Kebab" indicates the article. "Extension" 
means that the rods were received by us to be re- 
babbitted. We rebabbitted them and returned the 
rods to the customer. That was the only transaction. 
Now this is complete. 

The Court : That is the last one ? 

The Witness: That is the last one. We have 
listed the same parts exactly as we would have 
charged had the rods come in before the rebab. He 
gave us a deposit, because the rods did not come in. 
We segregated it that way, and so the customer can 
readily check his credit memorandum when he gets 
them back later on. This rod will come in; presum- 
ably 98 per cent do. This rod will come in for credit. 
We refer to the invoice number so-and-so, and say, 
"Crediting your account $1.80." This indicates that 
the connecting rod w r ent out of our stock without 
exchange. This indicates the rod was handed to us 
to be rebabbitted. 

The Court : What is the difference under the de- 
scription "Complete"? 

The Witness: "Complete" means the connecting 
rod and the labor operation we have done on it. 
We have some accounts we loan rods to and so state, 



192 United States of America vs. 

(Testimony of J. Leslie Morris.) 

"Rods loaned." But that is the only point. Is that 

clear? 

The Court: Yes. 

By Mr. Jewell : 

Q. Yesterday, Mr. Morris, I believe you testified 
[197] concerning certain other plants which you 
have in various cities in the United States, and I 
notice here on the top of the invoice, Defendant's 
Exhibit A, that there are several places listed which 
you did not mention yesterday; more specifically, 
Denver, Colorado. 

A. An affiliated one, that we never owned. 

Q. Vancouver, B. C. 

A. Another of the same sort. 

Q. Saskatchewan ? 

A. No, we never owned that at all. 

Q. Regina, Saskatchewan? 

A. Affiliated only. They pay no royalties at all. 
The others have paid royalties. I think one plant 
paid us a royalty — that is, similar to a royalty. 
They paid for the plant one per cent on what they 
did; in other words, the terms of it were based on 
the percentage of what they did. That was the one 
in Denver; but the only affiliation was, we sold 
them the mold, and stuff like that, to cast bearings, 
way back in the '20 ? s. 

Q. Did you build any of the plants in Denver? 

A. No; we furnished some of the stuff, like 
molds, and things like that. That was in '27, I think. 

Q. Did you build any of the other plants? 



J. Leslie Morris Co., Inc. 193 

(Testimony of J. Leslie Morris.) 

A. Of the affiliated plants ? 

Q. Yes. 

A. No, we didn't build them and sell them, if 
that [198] is what you mean. We just sold them 
certain tools. 

Q. After you sold them certain tools, what were 
your business relations with them which justified 
their name being on your invoices ? 

A. They bought tools from us. It was rather an 
inducement to get them to buy our tools. We were 
trying to build, with a small capital, what would 
look like a national service. That was the purpose 
of it, and why we adopted the word "Moroloy," 
meaning "Morris" and "alloy." That was the pur- 
pose of it. 

Q. Did you sell them any rods ? 

A. No rods. 

Q. Their names then were merely on these in- 
voices because of the fact that they were using the 
method you had designed % 

A. Yes, and they were using the word "Moro- 
loy" which had probably some national value; and 
they were using it. 

The Court: You spoke about a royalty. I didn't 
quite understand what you mean. 

The Witness : In the sale of the Denver plant — 
I guess I shouldn't have mentioned it — the deal at 
the Denver plant was that the young man from Los 
Angeles had very little funds, and rather than hav- 
ing a definite amount each month, he agreed to pay 



194 United States of America vs. 

(Testimony of J. Leslie Morris.) 
a percentage on what he did until the amount of 
the sale was complete. We kind of called that a roy- 
alty for a while. There was one plant, the Oakland 
plant, which [199] we sold earlier, which pays us 
definitely a royalty of two per cent on their rebab- 
bitting each month. Those are the two. The Denver 
plant has long since paid out, and pays us no more. 
During this period, however, the only period we are 
speaking of, the only plant from which w T e were col- 
lecting royalty was the Denver plant. We were not 
collecting any royalty from the Oakland plant at 
that time. 

The Court: At the time with which we are con- 
cerned here, was this process patented? 

The Witness : No, sir. 

The Court: Or was the method patented? 

The Witness: No, sir. We used common tools, 
the same as anyone else uses for the same purpose. 
There are three or four concerns in tow r n that use 
the same type of tools. 

Q. This compound word "Moroloy," was there 
a patent on that product ? 

A. The name was copyrighted, sir. 

Q. But the process you utilized in servicing w T as 
not a patented process ? 

A. No, sir, and the name, I might say, was origi- 
nated around '20 or '21, when we had no thought 
of babbitting connecting rods at all. We were mak- 
ing an entirely different article, a little detachable 
bearing that was detached from the connecting rod ; 



J. Leslie Morris Co., Inc. 195 

(Testimony of J. Leslie Morris.) 
in fact, that was the usage at that time among car 
dealers. We started babbitting connecting rods about 
'22 or '23, as I recaU it. [200] 

By Mr. Jewell : 

Q. Do you know, Mr. Morris, in setting up your 
inventory, what price you evaluated the stock at, 
which you have on hand ? 

A. Roughly, I know. 

Q. Was it at the price at which you sold whole- 
salers ? 

A. No, we discounted that, of course. Very few 
people carry inventory at the selling price. It is 
usually the cost. 

Q. At what price do you carry yours, do you 
know? 

A. I couldn't answer that. I would have to ask 
our accountant to help me out. 

Q. Are you familiar, Mr. Morris, with the meth- 
ods of doing business of various rebabbitters ? 

A. More or less, yes. 

Q. Would you say that rebabbitters, whose busi- 
ness you are familiar with, handle their sales and 
exchanges more or less in the same manner? 

Mr. Meserve: I object to that, your Honor, as 
incompetent and immaterial; not proper cross 
examination, and of no evidentiary weight in this 
case. 

The Court : Well, it may be. There are some fea- 
tures of the business under scrutiny here that are 
unique, I think, and in fact, matters we have a right 



196 United States of America vs. 

(Testimony of J. Leslie Morris.) 
to make comparison of relative to other activities 
that are similarly engaged in the business. It is no 
conclusion, of course. The problem [201] here is to 
determine whether this is a manufacturer or some- 
thing else, but analogies are helpful in tax matters, 
because there is supposed to be uniformity of levy. 
The theory of the tax laws is to bring about uni- 
formity ; every citizen must be treated the same with 
reference to the same character of activity. Over- 
ruled. Read the question. 

(The question referred to was read by the re- 
porter, as follows : 

"Q. Would you say that rebabbitters, w T hose 
business you are familiar with, handle their sales 
and exchanges more or less in the same manner ?") 

The Witness : Yes. 

By Mr. Jewell : 

Q. In other w T ords, most rebabbitters will take 
in the old in exchange ? 

A. Yes. We were all drawn very closely together 
during the N. R. A. days, and virtually the method 
of procedure which Baudet used in San Francisco 
was the same as mine; same as Hempe-Cooper, in 
Kansas City; Conrad Exchange; Seattle Exchange; 
there were some shops, of course, w T hich did not 
come into the N. R, A., and I wouldn't presume to 
state what their methods were; but we got a very 
good insight into each other's business at that time. 

Q. With respect to the particular method of 



e7. Leslie Morris Co., Inc. 197 

(Testimony of J. Leslie Morris.) 

handling customers, most rebabbitters did that in 

the same way ? 

A. Yes. The Federal Mogul, one of the largest 
in [202] the United States, they handled them in 
exactly the same way we did. 

Q. These automobile manufacturers, when they 
did rebabbitting, as I believe you testified, they also 
handled their rebabbitting on an exchange basis? 

A. Yes. 

Q. I believe you testified a moment ago, in re- 
sponse to a question from the Court, that about 98 
per cent of the time the customer returned an old 
rod. Not to be quibbling, but merely to determine 
if there is some other element which has not been 
directed to your attention, you also testified that 
about five per cent of the rods which you sold per 
month were ones which you had to purchase. 

A. I think I said " about" in each instance. 

Q. Ordinarily those two 

A. They should very nearly tally. I left a gap 
there of about two per cent. 

Q. Mr. Morris, would you tell us what babbitt 
consists of — the type of babbitt that you use? 

A. The kind of babbitt we use consists of from 
88 to 90 per cent tin, and the other two component 
parts, copper and antimony, in varying proportions ; 
from 88 to 90 per cent tin, and the two other com- 
ponent parts, being the copper and antimony, vary- 
ing; in other words, 88 per cent of tin would have 



198 United States of America vs. 

(Testimony of J. Leslie Morris.) 
about six per cent of copper; 90 per cent of tin 
about three and a half per cent of copper, and the 
balance, antimony. [203] 

The Court: But in all babbitt there are those 
three elements? 

The Witness: In all the babbitt we use. 

The Court : That was not my question. 

The Witness: Babbitt is a very much abused 
word. They call anything babbitt from 95 per cent 
lead to 5 per cent antimony. There are different 
uses for the cheaper babbitt. Some may be composed 
of lead, antimony, tin and copper. There are four 
kinds of babbitt metals. 

By Mr. Jewell : 

Q. During the taxable period here involved, how 
much did the babbit that you used cost you per 
pound, delivered ; the approximate price during that 
period ? A. Can I answer generally ? 

Q. Yes. 

A. Babbitt — our babbitt, which, of course, was 
90 per cent tin, is affected entirely by the tin mar- 
ket, We consider it low in price when it is below 
40; high in price when it is above 60 cents a pound. 
There is a range of fluctuation every day. We had 
to give during this period — that is, the bottom price, 
around 45 or 40, and the top price of 65 or 60. That 
is due to the daily fluctuation of the tin market. 

Q. How many pounds of babbit would you say 
you averaged per month during this taxable period, 
in your purchases ? [204] 



J. Leslie Morris Co., Inc. 199 

(Testimony of J. Leslie Morris.) 

A. I am afraid that would be more of a guess. 
You will have that on the statement of raw ma- 
terials. I think we have a statement of operations 
that will show the cost of the materials. That is 
much better than I can tell you, unless you wish 
me to give an opinion. 

Q. Your raw materials will also include bush- 
ings? A. Yes. 

Q. From whom do you purchase those bushings ? 

A. For many years from Bunting Brass and 
Bronze, Toledo, Ohio. 

Q. All the bushings ? A. Yes. 

Q. From whom do you purchase shims? 

A. From the National Motor Bearing Company, 
Oakland, California. 

Q. Approximately what do you pay for bush- 
ings ? 

A. Bushings will range in price from three cents 
to fifty cents each, depending upon the amount of 
brass in them, the diameter, and so on. Some might 
be even higher than fifty cents. 

Q. How about shims % 

A. Shims would almost cover the same thing; 
two or three cents. 

Q. You have testified that you used the old bab- 
bitt which comes off of the rods which are brought 
in to you. Will you tell me approximately what per 
centage of that old [205] babbitt you use as com- 
pared with new babbitt which you purchase? Can 
you give an opinion on that % 



200 United States of America vs. 

(Testimony of J. Leslie Morris.) 

A. Oh, I would say that to replace what is re- 
moved when the rods come in to us — because the 
babbitt is exactly the same; the analysis of the old 
babbitt will be exactly the same as the analysis of 
the new babbitt; approximately the same — so much 
so that we mix the two together and go right ahead 
and use it — I w T ould roughly say possibly half. 

Q. So on most of the bearing rods that come in 
to you about half the babbitt 

A. Still remains in it, yes. Then too, you must 
remember that babbitt, from melting it over and 
over, oxidation takes place, and when you scrape 
off the top we lose in weight about five per cent, to 
melt the babbitt off — you skim about that much off 
the top. 

Q. When the average rod is brought in to you 
nearly half the babbitt is burned off or worn away? 

A. About, I would say. I wouldn't want to be 
kept right to the point. 

Q. Mr. Morris, I show you a document entitled 
" Articles of Incorporation of J. Leslie Morris Co., 
Inc.," and ask you if that is a true copy. That is 
a copy that came from your files ? 

A. Yes, that's right. That is a true copy. 

Mr. Jewell: I would like to introduce this into 
evidence on behalf of the Government. [206] 

Mr. Meserve: I am going to object to it, your 
Honor, upon the ground it is incompetent, irrele- 
vant, and immaterial. It can't serve any purpose in 



J. Leslie Morris Co., Inc. 201 

(Testimony of J. Leslie Morris.) 
this case. I anticipate the argument is made that 
the corporation's articles may indicate what it is 
authorized to do, by its charter, but as we know, and 
I think the Court takes judicial notice, many cor- 
porations are authorized to do many things that 
they never enter into or upon, and I think the fact 
that they may be incorporated to do a manufactur- 
ing enterprise would not serve to prove that they 
did it, if that is the purpose for which it is being 
introduced. 

The Court: It might serve to prove it; it 
wouldn't prove it, if that is what you mean. It 
would be an item in the scheme of proof looking 
to that conclusion. If a man says he is engaged in 
the manufacturing business, it is some evidence 
against him, that he is so engaged; it is not con- 
clusive, of course. Let me read it before ruling. Ob- 
jection overruled. 

The Clerk: Government's Exhibit B in evidence. 
(The document referred to was received in 
evidence and marked "Government's Exhibit 
B.") 

RESPONDENT'S EXHIBIT B 

ARTICLES OF INCORPORATION 

OF 

J. LESLIE MORRIS CO., INC. 

Know All Men by These Presents: That we, the 
undersigned, all of whom are citizens and residents 



202 United States of America vs. 

(Testimony of J. Leslie Morris.) 
of the State of California, have this day voluntarily 
associated ourselves together for the purpose of 
forming a corporation under the laws of the State 
of California. 

We Hereby Certify : 

First : That the name of said corporation shall be 
J. Leslie Morris Co., Inc. 

Second : That the purposes for which it is formed 
are as follows : 

To own, maintain and operate a business for the 
manufacture, sale and distribution of Automotive 
and Industrial Bearing Metals and products. 

To own, maintain and operate branch plants and 
offices in the State of California and elsewhere for 
the manufacture, sale and distribution of such 
metals and products. 

To acquire land, buildings and personal property 
in the State of California and elsewhere for the 
purposes of establishing, maintaining and operating 
such plants and offices as may be necessary for the 
manufacture, sale and distribution of such metals 
and products. 

To acquire, by purchase, lease, or assignment, pat- 
ents and patent rights bearing on the manufacture 
of such metals and products. 

To acquire, by purchase, lease, or assignment, 
plants or businesses of other persons, firms or cor- 
porations for the further development of the busi- 
ness of this corporation, and to acquire and hold 
shares of stock and bonds of other corporations, 



J. Leslie Morris Co., Inc. 203 

(Testimony of J. Leslie Morris.) 

and to sell, exchange and otherwise dispose of or 

trade in such shares and bonds. 

To do any and all things necessary to properly 
carry on the business of the corporation, and to do 
any and all things necessary or incident to the car- 
rying on of the various lines of business in which 

this corporation may now or hereafter be engaged. 
* * ***** 

[Endorsed]: Respondent's Exhibit B. Filed 5/29, 
1940. R. S. Zimmerman, Clerk. By B. B. Hansen, 
Deputy. 



Mr. Jewell : If the Court please, I would like to 
confer with counsel. 

Q. Mr. Morris, I show you what purports to be 
a copy of the 1933 return of capital stock tax for 
the J. Leslie Morris Corporation, and ask you if 
you identify that as a [207] true copy of the return, 
or is that the one which you furnished the Govern- 
ment out of your file % 

A. You will have to ask our accountant to pass 
on that. I don't recall of having seen it before. 

Mr. Meserve : We will make no point of the fact 
that it is not a copy of the original. 

Mr. Jewell: Thank you. Then I would like to 
offer this in evidence on behalf of the Government 
as Defendant's Exhibit C. 

The Clerk: C. 



204 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Mr. Meserve: We will object to it upon the 
ground it is incompetent, irrelevant, and immaterial. 
Mr. Jewell: It is offered for the same purpose, 
as were the articles of incorporation. 
The Court: Objection overruled. 
The Clerk: Government's Exhibit C in evidence. 
(The document referred to was received in 
evidence and marked " Government 's Exhibit 
C.") 

RESPONDENT'S EXHIBIT C 

1933 RETURN 

OF 

CAPITAL STOCK TAX 

For Year Ending June 30, 1933 
Domestic Corporations 

This return must be filed with the Collector of 
Internal Revenue for your district on or before July 
31, 1933, and the tax must be paid on or before that 
date. 

1. Name — J. Leslie Morris Co., Inc. 

2. Address — 1361 So. Hope St., Los Angeles, 
Calif. 

3. Name of parent company, if any — (District 
filed— ) 

4. Name of subsidiary, if any — No. shares 
held— (District filed— ) 

5. Nature of business in detail — Manufacture 
Motor Bearings. 



J. Leslie Morris Co., Inc. 205 

(Testimony of J. Leslie Morris.) 

6. Incorporated or organized in State of — Cali- 
fornia. Month — October. Year — 1925. 



[Endorsed]: Respondent's Exhibit C. Filed 5/29, 
1940. R. S. Zimmerman, Clerk. By B. B. Hansen, 
Deputy Clerk. 



Mr. Jewell : I wish to confer with counsel again, 
please. With the consent of counsel, and no objection 
to the fact that these are not the originals, I offer 
a copy of the State of California Bank and Cor- 
poration Franchise Tax Return, of J. Leslie Morris 
Co., Inc., for the calendar year 1932, as Defendant's 
Exhibit D. 

The Clerk: Government's Exhibit D. 

Mr. Meserve: We are objecting to it upon the 
ground [208] that it is incompetent, irrelevant, and 
immaterial, but not incompetent because it is not 
the best evidence. 

Mr. Jewell: It is introduced for the same pur- 
pose as the articles and capital stock tax return. 
We are offering it merely for the purpose, your 
Honor, as an answer to Question 5 at the top of 
the return, as to the kind of business, where it is 
stated, "Mfg. Motor Bearings." 

The Court: Ojection overruled. 

The Clerk: Government's Exhibit D in evidence. 
(The document referred to was received in 
evidence and marked "Government's Exhibit 
D.") 



206 United States of America vs. 

(Testimony of J. Leslie Morris.) 

RESPONDENT'S EXHIBIT D 

State of California 

BANK AND CORPORATION FRANCHISE 
TAX RETURN 

This return must be filed with the Franchise Tax 
Commissioner within two months and fifteen days 
after the close of taxable year, together with remit- 
tance payable to State Treasurer. 

[Space for Name and Address.] 

1. Exact corporate title, J. Leslie Morris Co., 
Inc. 

2. Mail address, 1361 So. Hope Street, Los An- 
geles, Calif. 

3. Date of incorporation, Oct. 14, 1925. 

4. Under laws of California. 

5. Kind of business, Mfg. Motor Bearings. 

6. Date began business in California, Oct. 14, 
1925. 

7. Is this a consolidated return % No. 

8. Consolidated with 

Copy Statement of Net Income From Corporation 
Federal Income Tax Return for the Calendar 

Year 1932, or the Fiscal Year Commencing 

and Ending 

Gross Income 
******** 

[Endorsed] : Respondent's Exhibit D. Filed 5/29/ 
1940. R. S. Zimmerman, Clerk. By B. B. Hansen, 
Deputy Clerk. 



J. Leslie Morris Co., Inc. 207 

(Testimony of J. Leslie Morris.) 

Mr. Jewell: I offer the same return for the 
calendar year 1933, for the same purpose. 
Mr. Meserve: Same objection. 
The Court: Same ruling. 

Mr. Meserve : With the same understanding, that 
I am not objecting to their being incompetent by 
reason of their not being the best evidence. 
The Clerk: Government's Exhibit E. 

(The document referred to was received in 
evidence and marked " Government 's Exhibit 
E.") 

RESPONDENT'S EXHIBIT E 

State of California 

BANK AND CORPORATION FRANCHISE 
TAX RETURN 

This return must be filed with the Franchise Tax 
Commissioner within two months and fifteen days 
after the close of taxable year, together with remit- 
tance payable to State Treasurer. 

[Space for Name and Address.] 

1. Exact corporate title, J. Leslie Morris Co., 
Inc. Corporate number, 116056. 

2. Mail address, 1361 So. Hope St., Los Angeles, 
Calif. 

3. Date of incorporation, Oct, 14, 1925. 

4. Under laws of California. 

5. Kind of business, Mfg. Motor Bearings. 



208 United States of America vs. 

(Testimony of J. Leslie Morris.) 

6. Date began business in California, Oct, 14, 
1925. 

7. Is this a consolidated return? No. 

8. Consolidated with 

Copy of Statement of Net Income From Corpora- 
tion Federal Income Tax Return for the Cal- 
endar Year 1933, or the Fiscal Year Commenc- 
ing and Ending 

Gross Income 
******** 

[Endorsed]: Respondent's Exhibit E. Filed 5/29/ 
1940. R. S. Zimmerman, Clerk. By B. B. Hansen, 
Deputy Clerk. 



Mr. Jewell: I also offer in evidence a copy of 
the same return for the calendar year 1934, for the 
same purpose. 

Mr. Meserve: Same objection. 
The Court: Same ruling. 

The Clerk: Government's Exhibit F in evidence. 

[209] 
(The document referred to was received in 
evidence and marked "Government's Exhibit F.") 

RESPONDENT'S EXHIBIT F 

State of California 

BANK AND CORPORATION FRANCHISE 
TAX RETURN 

This return must be filed with the Franchise Tax 
Commissioner within two months and fifteen days 



J. Leslie Morris Co., Inc. 209 

(Testimony of J. Leslie Morris.) 
after the close of income year, together with remit- 
tance payable to State Treasurer. 

[Space for Name and Address.] 

1. Exact corporate title, J. Leslie Morris Co., 
Inc. 

2. Mail Address, 1361 S. Hope St., Los Angeles, 
Calif. 

3. Date of incorporation, Oct, 14, 1925. 

4. Under laws of California. 

5. Date began business in California, Oct. 14, 
1925. 

6. Kind of business, Mfg. Motor Bearings. 
Copy Items 1 to 27 From Page 2, Corporation Fed- 
eral Income Tax Return for the Calendar Year 

1934 or theFiscal Year Commencing 

and Ending 

Gross Income 
******** 

[Endorsed]: Respondent's Exhibit F. Filed 5/29, 
1940. R. S. Zimmerman, Clerk. By B. B. Hansen, 
Deputy Clerk. 



By Mr. Jewell: 

Q. Mr. Morris, to reiterate the figures, I believe 
you testified that approximately ten per cent of 
the rods which you sold went back to the same 
person; the same rods went back to the same per- 
son who turned them in. That percentage figure is 
correct? A. Roughly, yes. 



210 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. To the best of your knowledge? 

A. To the best of my knowledge, yes. 

Q. You stated, in response to a question from 
counsel for the plaintiff, that when rods were in- 
jured or damaged, you did not take them in. Will 
you explain to us w T hat you meant by injured or 
damaged ? 

A. We mean that when the connecting rod is, 
in our opinion, unfit for further service. 

Q. What would make it unfit for further service ? 

A. A crack in the surface of the rod which, 
although it was not broken, that crack is there, 
and we would be fearful of putting it in automo- 
biles — so fearful that we return it. If it is badly 
bent, or bent at all, for that matter, so it is easily 
noticeable to the eye, straightening might jeopardize 
its safety for further use. 

Q. But during the taxable period here involved 
you did straighten them ? [210] 

A. Aligning, yes. Aligning is a little bit differ- 
ent from straightening. Straightening is when the 
rod obviously is bent or cracked. Aligning is to 
correct a slight adjustment of three-thousandths 
to five-thousandths of an inch. On the shaft it has 
twisted to that extent and that is designated as 
aligning. 

Q. In other words, straightening a rod is correct- 
ing a longitudinal curvature? 

A. Yes. Sometimes they come in bent double 
and nobody would attempt to straighten a rod of 
that sort. 



J . Leslie Morris Co., Inc. 211 

(Testimony of J. Leslie Morris.) 

Q. Aligning a rod is where you adjust the cap or 
the shank end of the rod ? 

A. No, it is still a bending operation, but such 
a slight bending operation; it is still a straight- 
ening operation, I mean. We still straighten the 
bend that is in the rod, but that is so small, one- 
thousandth or two-thousandths of an inch, that it 
could not possibly affect the structure of the steel 
and imperil its ability to function further. 

Q. Mr. Morris, it is not clear to me just ex- 
actly what the difference is between straighten- 
ing and aligning. For the purpose of the record, 
at least, I am sure it is not quite clear, and I would 
like to have you explain the difference, if you can. 
A. I am speaking in the parlance of the 
trade; in the parlance of the trade we call 
straightening a rod when [211] you would 
possibly stick it into a vise on the bench, with 
no thought of alignment at all, but probably try- 
ing to correct it with the eye, to look straight. That 
is what we call straightening a connecting rod. 
Aligning is something you cannot possibly deter- 
mine with the eye. You must mount it on a fix- 
ture, which is a common fixture in all garages, and 
by a surface plate, determined by a feeler gauge. 
A feeler gauge is a thin sheet of steel, with desig- 
nations of a thousandth or two-thousandths, usu- 
ally grouped together like a fan, so that you can 
select one-thousandth or two-thousandths, or three- 
thousandths. It is determining a very, very fine 
adjustment in the perfect alignment of the connect- 



212 United States of America vs. 

(Testimony of J. Leslie Morris.) 
ing rod bearing with the wrist pin, and invariably 
now it is done when it is assembled. Aligning is 
a very fine adjustment whereas straightening is just 
hitting with a hammer and pulling to make it 
straight to the eye. 

Q. After straightening you would further re- 
fine the straightening by aligning? 

A. Yes, we do not do straightening, because we 
do not want to take the responsibility. 

Q. What you mean is, alignment, in common par- 
lance, is a fine degree of straightening % 

A. Yes. 

The Court : A degree of straightening % 

The Witness: Yes; it requires instruments to 
deter- [212] mine how much it is out. 

The Court: Instruments of precision % 

The Witness: Yes. 

The Court: You did aligning during the taxable 
period 1 

The Witness: Yes, we frequently have rods 
brought to the counter, and they say, " Please align 
them for us." We align them and hand them back 
the same connecting rod. That is a practice that ob- 
tains in the industry. 

By Mr. Jewell: 

Q. That is your custom? 

A. Yes, because some garages do not have this 
equipment, some of the very smaller ones, and they 
send them to us to have the rods aligned. That is 
common practice in the trade, to have one of these 



J. Leslie Morris Co., Inc. 213 

(Testimony of J. Leslie Morris.) 
stands for aligning, but it is a very expensive tool. 
Most of the garages are provided with them, but 
some few are not. 

The Court : Have you finished that line % 

The Witness: Yes. 

The Court: I want to ask you a question about 
this prospectus. I am calling the catalog a pros- 
pectus, referring to Plaintiff's Exhibit 49, which 
is the one marked 1933. I call your attention to 
the following language appearing on the inner side 
of the first page: " Features of 1933. Jobber's In- 
ventories Reduced. Rights and Lefts now Inter- 
change. Jobbers Need No Longer Stock both Rights 
and Lefts to Service Off-set. Pressure Feed Con- 
necting Rods. [213] By our exclusive manufactur- 
ing practice, developed for 1933 conditions — Job- 
bers now reduce inventories 50% on these numbers. 
Obsolescence protection and stock control. Again 
1933 conditions demand protection of jobbers' in- 
vestments. Moroloy has met the situation with an 
Obsolescence and Stock Control Plan, which guar- 
antees complete and continuous protection of the 
Jobbers Connecting Rod Investment. Details on re- 
quest." 

On the next page the following: " Casting. Moro- 
loy Certifugally Processed Rods Meet Engineering 
Specifications of Original Car and Motor Manufac- 
turers. This process deposits babbit on the tinned 
surface under extreme centrifugal pressure, assur- 
ing an absolute bond between babbitt and steel, that 



214 United States of America vs. 

(Testimony of J. Leslie Morris.) 
is not obtainable by the old fashioned hand poured 
method. Centrifugally processed connecting rods are 
endorsed by the Society of Automotive Engineers 
and are used exclusively by the following manufac- 
turers : ' ' — mentioning a number of them. 

Then this legend: "If it's not centrifugally cast 
— it's not a factory duplicate." 

Under the heading: "Machining and Finishing: 
Moroloy machining and finishing is accompanied 
with the same engineering exactness, following close- 
ly the recommendations and usages of leading origi- 
nal manufacturers. * * * Moroloy processed rods 
are straightened, cleaned and serviced with new 
bolts, nuts, shims and piston pin bushings. Oil [214] 
clearance allowed. No scraping nor reaming re- 
quired. Electrical alignment is an exclusive Moro- 
loy feature." 

A. Under the whip of extreme competition that 
was sales talk. We thought we had hit on something 
which was very good when we put the electric light 
on the aligning fixture. We found it was a fail- 
ure and used it no more. I can explain the obso- 
lescence feature. 

The Court: After I finish it all I will ask you. 

"Service. Fifteen manufacturing plants, located 
at strategic points over the United States and Can- 
ada, render a coast-to-coast service, convenient to 
every jobbing center. Ample stocks at all branches 
assure same day shipment. Telephone and tele- 
graphic orders receive instant attention/' Now you 
may make any explanation you deem pertinent. 



J. Leslie Morris Co., Inc. 215 

(Testimony of J. Leslie Morris.) 

The Witness: In 1933, your Honor, the condi- 
tions were not any too good. Everybody was fear- 
ful of their investment. We thought we had hit upon 
a very wonderful scheme when this catalog was 
brought out, to save, if possible, the number of 
connecting rods that the wholesaler kept on his 
shelf. There is what we term a bleeder hole on the 
side which sprays the oil. We refer to it in the leg- 
end under the picture. That sprays the oil on the 
cylinder wall. Now, the new rods, — in fact, all 
the comiecting rods, the ones that are in the original 
car, are all set around in one way so that the oil 
hole extends, say, on the [215] right-hand side of 
the motor, and flows oil to spray on the cylinder 
wall of the right-hand side. There is no hole on the 
other side as they originally come to us. There was 
no reason why you couldn't reverse the connecting- 
rod. So in referring to obsolescence we meant that 
we drilled the hole the same size on the opposite 
side so that you could put the rod in, despite the 
fact that it was a trifle off-set, and instruct that 
the garageman plug the hole he did not use. In other 
words, we drilled a hole on each side. We found 
that was not practical, because the garageman very 
shortly would put it in without reading any instruc- 
tions at all, and would leave both holes open so 
it would burn out, and it wouldn't give the oil pres- 
sure; so that was one of the things in 1932 to 1933 
we were all struggling very hard to do, without en- 



216 United States of America vs. 

(Testimony of J. Leslie Morris.) 

tailing any more investment than was necessary. 

By Mr. Jewell : 

Q. Will you explain which end of the rod the 
bleeder hole is in? A. The babbitting. 

Q. In the upper end? 

A. In the upper end, yes. Do you want that 
explained as to the fifteen manufacturing plants? 

The Court : If you want to explain that. 

The Witness : Yes, I would be very glad to do it, 
because Moroloy service is rendered in places other 
than [216] rebabbitting establishments. For in- 
stance, in Regina, Saskatchewan, when you walk 
up to their business, you find it is a machine works. 
They are rendering Moroloy service. You find a 
regular manufacturing plant, I think they manu- 
facture instruments. They bought the equipment, 
and have added the business of manufacturing con- 
necting rods. Frankly, we did not know it was such 
an important word at the time. In other places, 
take for instance, Atlanta, Georgia, their Moroloy 
bearing service is a part of a wholesale automotive 
establishment. In Jacksonville, Florida, that is a 
machine shop where they do crank shaft regrind- 
ing, engine boring, and so they use the word " Moro- 
loy" to distinguish that service rather than the ma- 
chinery. It is a place where repairs were generally 
done, and in some instances, manufacturing was 
done. Of course, in our own plants, we do nothing 
but babbitt connecting rods. 

The Court: What is it that produces or enables 



J. Leslie Morris Co., Inc. 217 

(Testimony of J. Leslie Morris.) 

one to practice this Moroloy system, so called? Is 

it tools? 

The Witness: Yes, they bought molds from us. 
We had a whole string of little molds and patterns 
to have cast iron molds made from which we could 
sell cheaper than they could produce the patterns, 
and have each made individually. As I recall it, we 
sold the outfit for $2900.00. That was the whole 
string of molds, to compensate for the various types 
of oil patterns we used. This was started back in 
'25 when practices were a little bit different. As a 
matter [217] of fact, all that we sold are no longer 
used by virtue of the conditions in the automo- 
bile industry. We had those patterns made, and 
from those patterns cast iron molds were made that 
they would pour the babbitt against, in every in- 
stance following, just as the book says, the design 
and practice of the original car manufacturer. In 
other words, we wanted to put babbitt in our babbit- 
ted rod to conform to their recommendations, be- 
cause we felt the engineers knew what they were 
doing. That was the analogy that we were trying to 
accomplish all the time; that our repair job would 
be just as serviceable to the customer as it was origi- 
nally. 

The Court: Was that the only commercial ad- 
vantage? For instance, in Saskatchewan, Canada, 
where labor conditions would be different — assum- 
ing they would be different, was that the only com- 
mercial advantage that a man desiring to engage 



218 United States of America vs. 

(Testimony of J. Leslie Morris.) 
in this business would have in using your system, 
the Moroloy system, would be the mechanism where- 
by he practiced this system ? 

The Witness: Yes, it was more or less the 
thought of getting us all under the same trademark 
name; under the name we copyrighted; the same 
name, so that it would give a semblance of national 
organization, national service, w r e might say; not 
to hold out as a national organization or a national 
service. 

The Court: I am speaking of Saskatchewan, the 
international service. [218] 

The Witness: That is the only place we cross 
any boundary, however. 

The Court: Was there something in the system 
that indicated an efficient babbitting of a connect- 
ing rod that had been used and was not unfit for 
use, but imperiled the efficient use of the vehicle — 
wasn't the system designed to change the connect- 
ing rod so that it would function just as efficiently 
as it did when it came from the factory % 

The Witness: That is exactly right; so it would 
function just as efficiently as the rod had originally 
with the bearing in it ; in other words, our rebabbit- 
ting service followed the line of a new connecting 
rod at the factory, that would be babbitted the same 
as ours. They are made of steel, and have to be bab- 
bitted. That is what is called original babbitting. 
That is why we referred to using the same process 
in our rebabbitting as they did on the original rod 



J. Leslie Morris Co., Inc. 219 

(Testimony of J. Leslie Morris.) 
to babbitt it. That was the point we were trying to 
get across ; trying, naturally, to make it appear that 
we did it better than anyone else, and which w T as 
natural in business advertising. 

The Court: You say, quoting again from the 
same Exhibit 49: "Moroloy machining and finishing 
is accomplished with the same engineering exactness, 
following closely the recommendations and usages 
of leading original manufacturers. ' ' What did you 
mean by saying ' ' original manufacturers ' ' ? 

The Witness : The people I mentioned yesterday. 
When [219] you drive an automobile off the floor, 
we w^ould say that everything in that automobile 
was original; that is to say, the babbitting is origi- 
nal, the wrist pins are original, and so on. As you 
see 500 or 5,000 more down the road, some parts 
of the automobile would fail; in this instance, the 
babbitt, for want of oil, or excessive use, or failure 
of the operator to put oil in, and this bearing is 
impaired; that is, it begins to make a noise; you 
hear a clicking; it begins to make a noise, and it 
indicates that it should be replaced. It doesn't stop 
the automobile, but it does mean that it should be 
replaced so at the first opportunity, when you have 
a valve ground, or something like that, the garage- 
man invariably finds it and suggests to you while 
he is in the automobile, repairing it, " Hadn't you 
better get this rod exchanged." It is common par- 
lance of the industry. That is a distinguishing 
feature. When we say "original," we mean a new 



220 United States of America vs. 

(Testimony of J. Leslie Morris.) 
automobile as delivered to the customer. Later on, 
when some part fails, just exactly as a tire is re- 
placed, or something of that sort, so it is with a con- 
necting rod. The rod is all right, but the bearing 
needs rebabbitting, and as the garageman frequent- 
ly says, "Go over and get the rod exchanged for 
this," or "This bearing is cracked," and "we have 
an extra for it." I hope I have made myself clear. 

By Mr. Jewell : 

Q. I show you Plaintiff's Exhibit 46, a price list 
[220] effective April 15, 1933. When was your next 
price list after this one ? 

A. From memory, sir, I couldn't say, but we 
have got them all here. We went through the files 
and picked them out very carefully. We only had 
one or two, but the ones we have, to the best of my 
knowledge, are the ones in sequence as they came 
out. 

The Court: Here is one effective September 24, 
1934: Exhibit 47. 

The Witness: The dates on them indicate the 
sequence in which they were issued. 

The Court: This Plaintiff's Exhibit 47, being 
a price list effective September 24, 1934, is the 
last of the price lists which are placed in evidence, 
to the best of your knowledge, that covers up 
through the taxable period here involved? 

The Witness: Yes. 

Q. Mr. Morris, I see on Exhibit No. 21, in the 
legend, you have stated that the rod is now placed 



J. Leslie Morris Co., Inc. 221 

(Testimony of J. Leslie Morris.) 
in the lathe and babbitt is bored, faced and cham- 
fered. Explain the meaning of that word. 

A. Chamfered ! 

Q. Yes. 

A. It is the little oval edge on the side we faced 
perpendicularly. If we bore a hole, we have square 
corners, and we knock off the square corners, and 
the oval, the rounded [221] effect is called cham- 
fering. 

Q. Similar to beveling? 

A. Yes. It is oval, rather than flat. They are 
frequently just beveled though. In this instance 
we do the same operation. 

Q. You state on the legend of Picture 26 that 
about one-half the connecting rod rebabbitts re- 
quire new bushings in the small end of the shank. 
What happens to the other end of the rods % 

A. They are so designed that they clamp the 
wrist pin tight with a screw. I can show you the 
distinction. There is a clamp, and that doesn't re- 
quire a bushing, because when the clamp screw is 
put down, it pulls down tight on the wrist pin that 
is loose in the piston. 

Q. Referring to what exhibit? 

A. Exhibit 41. It is just the design of the con- 
necting rod. It doesn't take a bushing. That show T s 
plainly, because that has a new bushing in it. 

Q. Plaintiff's Exhibit 34? 

A. Yes. Those are the two types. They run just 
about equal, I would say. 



222 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. I notice on Plaintiff's Exhibit 34, in the bush- 
ing in the shank end of the rod, the small bushing, 
a groove around the center of the bushing. Is that 
made by you, that groove ? 

A. No, the groove is in the bushing when we 
buy it. [222] 

The Court: Let me see that exhibit. You buy 
the bushing? 

The Witness : Yes, we buy the bushing. 

The Court : Do you babbitt it ? 

The Witness: We buy the bushing from the 
Bunting Brass at Toledo, and there are several other 
manufacturers of bushings. 

By Mr. Jewell : 

Q. Mr. Morris, on Plaintiff's Exhibit No. 29 you 
state in the legend that certain Pontiac Bearings 
require a continuous oil groove around the center. 
What other model automobiles also require that? 

A. The very late 1939 and 1940 Chevrolet. I be- 
lieve those are about the only two, — the Chevrolet, 
and the Pontiac ; but I believe that we cut the same 
oil groove in the '40 Chevrolet. 

Q. I notice that Plaintiff's Exhibit 32, in the 
legend, it ends the statement with respect to the 
procedure involved in the plaintiff corporation. 
What occurs to the rods after this operation is com- 
pleted, as described in Plaintiff's Exhibit No. 32? 

A. What happens to the connecting rod ? 

Q. Yes. 



/. Leslie Morris Co., Inc. 223 

(Testimony of J. Leslie Morris.) 

A. It is packed and shipped; put in boxes and 
shipped. We unfasten the nut to see that the thread 
in the bolt has not slipped during the time it was 
tightened [223] up while we were rebabbitting it. 
We check it, and then it goes in the little red box 
we spoke of, and is sent back to the customer. In 
many instances they are waiting at the counter for 
them, and we don 't put them in the box. 

Q. When a con. rod comes in to you, and it is 
of the type shown in Plaintiff's Exhibit No. 34, it 
requires that small bushing at the shank end of the 
rod, you automatically remove that bushing, do you 
not? A. The old bushing? 

Q. Yes. A. Yes, we take it out. 

Q. Whether it is damaged or is not ? 

A. The supposition is it is worn or it wouldn't 
come in. We always replace the bushing, unless the 
order reads "Do not replace bushings/' and we 
have orders to show. The reason of that is they have 
an oversize wrist pin that they put in there ; in other 
words, something special about the wrist pin, and 
the order frequently reads, "Do not change the 
bushing"; but unless it is ordered that way, we in- 
variably change the bushing and put in a new one. 

Q. Most of the rods which come in to you need 
a new bushing at the shank end of the rods, do they 
not ? A. Yes. 

Q. That is worn? A. Yes. 

Q. It is necessary for the rod to properly per- 
form its [224] function, that the bushing, as well 



224 United States of America vs. 

(Testimony of J. Leslie Morris.) 

as the bearing, at the bearing end of the rod, be in 

first class shape ? A. Yes. 

Mr. Jewell : You may take the witness. 

Redirect Examination 
By Mr. Meserve : 

Q. Mr. Morris, before rebabbitting connecting 
rods became a specialized service, how was a burned 
out connecting rod repaired, prior to 1910 or 1911 ? 

Mr. Jewell: If the Court please, I object to that 
question. That was asked on direct examination. I 
haven't touched on it in cross examination. 

The Court: He said it was done manually, by 
the garageman. 

The Witness : Yes. 

By Mr. Meserve : 

Q. You referred, Mr. Morris, to a guarantee that 
you give or make in some form. Just what did you 
refer to, and what do you guarantee ? 

A. We guarantee the rebabbitting job; guaran- 
tee the babbitt against defective workmanship and 
material; that is, the labor and material that goes 
into the service of rebabbitting the connecting rod. 

Q. And it has nothing to do with the rod itself? 

A. No. There is no guarantee on the forging, the 
connecting rod itself, because we did not make that, 
and we [225] couldn't guarantee it. 

Q. In discussing in your cross examination the 
matter of exchange with automotive or automobile 
dealers who sell new cars from their showroom 



/. Leslie Morris Co., Inc. 225 

(Testimony of J. Leslie Morris.) 
floors, of various types and models and makes, you 
referred to the fact that they also maintained an 
exchange of connecting" rods. It is true, is it not, 
Mr. Morris, that practically each of these institu- 
tions maintain a repair shop? A. Yes. 

Mr. Jewell: If the Court please, I object to the 
question as leading the witness. 

Mr. Meserve: All right, I will withdraw it. 

Q. Do each of the dealers in new cars, automo- 
tive dealers, maintain a repair shop for their cars 
and other cars ? 

Mr. Jewell: One moment, please. I object to the 
question upon the ground that it calls for a conclu- 
sion on his part as to whether or not the type of 
establishment maintained by the automobile manu- 
facturer amounts to a repair shop. 

The Court: I don't know whether it calls for a 
conclusion or not. I am assuming he is not going to 
answer a question that he cannot answer. Overruled. 

The Witness: As a matter of fact, they all have 
repair shops. All of the larger dealers and distribu- 
tors. I am speaking about people like Hoffman and 
Howard; they all [226] maintain a repair depart- 
ment, and they use connecting rods of their own 
make, and use connecting rods which are babbitted 
from many other makes, representing repairs on 
anything that comes into their shop to be repaired; 
used cars, and such. 

By Mr. Meserve : 

Q. Do you know it to be a fact, Mr. Morris, that 



226 United States of America vs. 

(Testimony of J. Leslie Morris.) 
the larger or more principal dealers of the popular 
type of cars repair cars that they take in in ex- 
change, whether of the same make or of other 
makes? A. They do. 

Q. And in referring to the exchange with cer- 
tain dealers, you are referring to the connecting 
rods used in that type of operation ? 

A. They bring rods over from any make of car, 
and ask for a babbitted one, or have them babbitted. 

Q. You used the statement, Mr. Morris, in your 
cross examination, that very frequently you get back 
in your exchange operation one of your own rods. 
What did you mean by the statement "one of my 
own rods"? 

A. Did I make that statement ? 

Q. I wrote it down and understood it to be that. 
Maybe I misunderstood it. You said very frequently, 
when you referred to your five per cent differential 
that you had to replace them in the exchange opera- 
tion through jobbers, that very frequently you got 
back one of your own [227] rods. What did you 
mean by that statement ? 

A. I certainly didn't intend to, sir, because I 
wouldn't be able to recognize my own rod if it came 
back. May I have the question read ? 

Q. I will restate it again. As I understood it — 
it might not be important; I want to be certain. 

A. I will be glad to help. 

Q. Referring to the fact that at certain times, 
Mr. Morris, you may have to go to a jobber, or to 



J . Leslie Morris Co., Inc. 227 

(Testimony of J. Leslie Morris.) 
an automobile dealer and get a rod of a particular 
type that you want to serve some customer that may 
be asking for it, and you might not have it on hand, 
or he did not send you a rod to rebabbitt of that 
type — my understanding was that in response to the 
inquiry made in that particular you used the phrase, 
"we frequently have gotten back from the jobber 
one of our own rods. ' ' 

A. I certainly want to correct it if I did, be- 
cause I wouldn't be able to determine our own rod 
after it was babbitted unless, of course, it was not 
used. They frequently send them back, if they don't 
use them, and we give them credit for the babbitt 
and all. I don't recall having said that, but if I did, 
I want to correct it. 

Q. I may be the one who is confused. I want to 
be sure it was myself, and not the record or the 
Court. If you did use that statement in your testi- 
mony, I assume you meant one of the rods that you 
had rebabbitted and not any [228] rods of your own 
make or manufacture. 

A. Of course, that is what I would mean, yes. 

Q. Now, during the time in question in this suit, 
Mr. Morris, did you have or maintain any warehouse 
or service? A. No. 

Q. You have verified that ? 

The Court : Warehouse or service ? 

Mr. Meserve : Warehouse service. 

The Court: What is the answer to that? 

The Witness : No. 



228 United States of America vs. 

(Testimony of J. Leslie Morris.) 
By Mr. Meserve : 

Q. You have verified that since yesterday by 
examining your records, is that correct ? 

A. That's correct. 

Q. Referring, Mr. Morris, to Government's Ex- 
hibit A, can you explain in a little more particular- 
ity, the method of billing, taking Sheet 1, and the 
first item in Column 1 on Sheet 1, 3 in quantity. 
What does that refer to ? 

A. That C. E. Encell, Los Angeles, sent to us 
three No. 422 connecting rods to have rebabbitted, 
for which we charged him 70 cents each, $2.10. 

Q. So that the 70 cents is the rebabbitting price 1 

A. This 70 cents is the price for each, yes. 

Q. 70 in the column under the word "Rebab." 
on page 1 of Exhibit A, is the rebabbitting charge 
per item % [229] A. Per item, yes. 

Q. And under "Extension" is the total? 

A. The total. 

Q. And in the instance which you are looking 
at on page 1 of Exhibit A of your invoice, there is 
no charge made at all for any rods 1 

A. No, those rods were received before we re- 
babbitted them. 

Q. What is the difference, if any, on page 2 of 
Exhibit A? 

A. That is an identical transaction. 

Q. An identical transaction, except a different 
amount ? 

A. A different concern, yes. This is the Hartman 
Auto Parts Co., instead of Encell. 



J. Leslie Morris Co., Inc. 229 

(Testimony of J. Leslie Morris.) 
Q. And the quantity ? A. Yes. 

The Court The last one is the one that shows the 

difference % 

The Witness : Yes, the last one. 

By Mr. Meserve : 

Q. This is the one I want to get, turning to page 
3 of Exhibit A as it is now bound, and referring 
to the one to the Mission Auto Parts Company, is 
that right ? A. That is correct. 

Q. Explain the difference in that one as to the 
ones [230] you have previously explained. 

A. This records the rebabbitting charge on one 
0529 connecting rod, and the order indicates that 
we took a babbitted connecting rod and sent it in 
advance of receiving this. We made a deposit charge 
under " Forging" of $1.80, and the sum of the two 
is $2.85. We segregate that sum. Then when we issue 
a credit against this $1.80, the bookkeeper there can 
instantly determine that we have credited him with 
the proper amount. 

Q. The $1.05 shown on page 3 was a babbitting 
charge 1 ? A. Yes. That remains, of course. 

Q. On page 4, the explanation is the same? 

A. The same as page 1. 

The Court: Evidently when they were detached 
here, the order was changed. 

Mr. Meserve : That was why I wanted to get the 
matter straight, your Honor. 

Q. Reference was made, Mr. Morris, to an en- 
gine business that you are conducting, or have an 



230 United States of America vs. 

(Testimony of J. Leslie Morris.) 
interest in in East Los Angeles. That has nothing 
to do with the J. Leslie Morris Company in any 
particular? A. No, it hasn't. 

Q. The J. Leslie Morris Company does not have 
any ownership in it, directly or indirectly, except 
that you may be personally interested ? 

A. That is all. [231] 

Q. When you refer to a mechanic in Saskatche- 
wan that wants to do rebabbitting in the repair of 
connecting rods, there is nothing to prevent him 
from making or having made the molds and build- 
ing and adapting machinery to do exactly what is 
done, without any permission from you whatsoever ? 

A. Nothing in the world, no. 

Q. Except that he cannot use the words "Moro- 
loy" unless you desire to let him? 

A. That's right. 

Q. But there is nothing to prevent him from 
getting any of the apparatus to do it? It is stand- 
ard? 

A. He could duplicate every bit of the equip- 
ment, if he saw fit. 

Q. The only advantage to him is, you having had 
the dies and patterns made, you can furnish them 
cheaper ? A. Yes. 

Q. You have seen these two letters? 

Mr. Jewell : Yes. 

Mr. Meserve: You are not making any objection 
to their not being originals ? 

Mr. Jewell : No. 



J. Leslie Morris Co., Inc. 231 

(Testimony of J. Leslie Morris.) 
By Mr. Meserve : 

Q. Mr. Morris, I show you copies of two letters 
that were transmitted to you from the deputy com- 
missioner of Internal Revenue, dated March 25, 
1938, and April 7, 1939, which letters are in sub- 
stance the notice by the Government [232] of the 
refusal or declination to concede to your claim for 
a refund. 

Do you remember receiving the originals of those 
letters % A. I do, yes. 

Mr. Meserve : We will offer the copies of the two 
letters together, one of March 25, 1938, and of April 
7, 1939, from the Commissioner of Internal Reve- 
nue, as Plaintiff 's Exhibit next in order. 

Mr. Jewell : No objection for not being originals. 

The Clerk: Plaintiff's Exhibit 61 in evidence. 
(The document referred to was received in 
evidence and marked "Plaintiff's Exhibit No. 
61.") 

PLAINTIFF'S EXHIBIT No. 61 

Mar 25 1938 
MT:ST:JNG 
C1:S-61906 

J. Leslie Morris Company, Inc., 
1361 South Hope Street, 
Los Angeles, California. 

Gentlemen : 

Reference is made to your claim for refund of 
$500.00, representing tax paid under the provisions 
of section 606(c) of the Revenue Act of 1932. 



232 United States of America vs. 

(Testimony of J. Leslie Morris.) 

The claim is based on the contention that rebab- 
bitted connecting rods are not subject to the tax im- 
posed by section 606(c) of the Eevenue Act of 1932. 
In this connection you refer to the decision ren- 
dered in the case of the Hempy-Cooper Manufac- 
turing Company vs. the United States and other 
decisions. 

You are advised that this office has consistently 
held that rebabbitted connecting rods which are 
placed in stock are subject to the tax imposed by 
section 606(c) of the Eevenue Act of 1932, when 
sold or exchanged, and that the allowance granted 
for the unserviceable article taken in trade should 
'be included as a part of the sale price on which the 
tax is computed. 

With respect to the decision rendered in the Dis- 
trict Court for the Western District of Missouri, 
Western Division, in the case of the Hempy-Cooper 
Manufacturing Company vs. the United States, you 
are advised that the Bureau has taken the position 
that the decision is confined to that case and will 
not be considered as a precedent for other cases 
where similar facts are involved. The decisions cited 
are regarded as making no change in the position 
heretofore taken by the Bureau with respect to the 
taxability of rebabbitted connecting rods and will 
not be considered as a basis for the adjustment of 
claims filed by other taxpayers. 



J. Leslie Morris Co., Inc. 233 

(Testimony of J. Leslie Morris.) 
In view of the above, the claim is rejected in full. 
Respectfully, 

GUY T. HELVERING, 

Commissioner. 
By (Signed) D. S. BLISS 

Deputy Commissioner. 
CC :Los Angeles, Cal. 
CC .-Files 
JNG:MR 



Apr 7 1939 
MT:ST:JNG 
Cls. S-65530 & 67956 

J. Leslie Morris Company, Inc., 
1361 South Hope Street, 
Los Angeles, California. 

Gentlemen : 

Reference is made to your claims for the refund 
of $500.00 and $500.00, representing tax paid under 
the provisions of section 606(c) of the Revenue Act 
of 1932 for the period June 1932 to August 1935, in- 
clusive. 

The claims are based on the contention that you 
are not a manufacturer of connecting rods. In this 
connection you refer to the decisions rendered in 
the cases of J. C. Skinner v. the U. S., Monteith 
Brothers Company v. the U. S., Hempy-Cooper 
Mfg. Company v. the U. S., and Pioneer Motor 
Bearing Company v. the U. S. 



234 United States of America vs. 

(Testimony of J. Leslie Morris.) 

This office takes the position that a person who 
produces connecting rods, etc., from used or scrap 
materials or from both new and used material by 
a manufacturing process which produces serviceable 
products, is subject to the manufacturer's excise tax 
imposed by section 606(c) of the Revenue Act of 
1932 on his sales thereof. Cases on this point which 
support the Bureau's position and decline to follow 
the J. C. Skinner Company, Monteith Brothers 
Company, Hempy-Cooper Mfg. Company and Pio- 
neer Motor Bearing Company's decisions are Claw- 
son and Bals Inc. v. Harrison, decided November 
26, 1938 by the United States District Court for the 
Northern District of Illinois, and E. Edelmann and 
Company v. Harrison, decided March 16, 1939 by 
the same Court. 

In view of the above the claims are rejected in 
full. 

Respectfully, 

GUY T. HELVERING, 

Commissioner. 
By: 
(Signed) D. S. BLISS 

Deputy Commissioner. 
cc-Los Angeles, California. 
cc-Files. 
JNGrEPM 

[Endorsed]: Plaintiff's Exhibit No. 61. Filed 
5/28, 1940. R. S. Zimmerman, Clerk. By B. B. Han- 
sen, Deputy Clerk. 



J. Leslie Morris Co., Inc. 235 

(Testimony of J. Leslie Morris.) 

Mr. Meserve: Mr. Jewell, I understood in our 
conference a moment ago that you would agree that 
the copies of the 1934 and 1935 capital stock tax 
returns of J. Leslie Morris Company, Inc., which 
I have in my hand are copies 

Mr. Jewell: I will not object to them upon the 
ground that they are not the best evidence. 

Mr. Meserve : I call your attention to the one in 
1935, that it doesn't even bear a copy of the signa- 
ture. 

Mr. Jew T ell : I will stipulate that the signature is 
the same as it is on the 1934. 

Mr. Meserve: We offer in evidence the capital 
stock tax return of the Plaintiff corporation for the 
year 1934 as Plaintiff's Exhibit next in order. [233] 

The Clerk: Plaintiff's Exhibit 62 in evidence. 

Mr. Meserve: And the one of 1935 as Plaintiff's 
Exhibit 63, is that correct ? 

The Clerk: Plaintiff's Exhibit 63 in evidence. 
(The documents referred to were received in 
evidence and marked Plaintiff's Exhibits Nos. 
62 and 63," respectively.) 

PLAINTIFF'S EXHIBIT No. 62 

1934 Return 

of 

Capital Stock Tax 

For Year Ending June 30, 1934 

Domestic Corporations 

This return must be filed with the Collector of 

Internal Revenue for your district on or before 



236 United States of America vs. 

(Testimony of J. Leslie Morris.) 

July 31, 1934, and the tax must be paid on or before 

that date. 

1. Name — J. Leslie Morris Co., Inc. 

2. Address — 1361 So. Hope St., Los Angeles, 
Calif. 

3. Name of parent company, if any — (Dis- 
trict Filed— ) 

4. Name of subsidiary if any — No. shares 
held— (District filed— ) 

5. Nature of business in detail — Rebabbitting 
Connecting Rods. 

6. Incorporated or organized in State of Cali- 
fornia. 

[Endorsed]: Plaintiff's Exhibit No. 62. Filed 
5/29, 1940. R. S. Zimmerman, Clerk. By B. B. Han- 
sen, Deputy Clerk. 



PLAINTIFF'S EXHIBIT No. 63 

1935 Return 

of 

Capital Stock Tax 

For Year Ending June 30, 1935 

Domestic Corporations 

This return must be filed with the Collector of 

Internal Revenue for your district on or before 

July 31, 1935, and the tax must be paid on or before 

that date. 

1. Name — J. Leslie Morris Co., Inc. 



J . Leslie Morris Co., Inc. 237 

(Testimony of J. Leslie Morris.) 

2. Address — 1361 So. Hope St., Los Angeles, 
Calif. 

3. Name of parent company, if any — (Dis- 
trict Filed— ) 

4. Name of subsidiary if any — No. shares 
held— (District filed— ) 

5. Nature of business in detail — Rebabbitting 
Connecting Rods. 

6. Incorporated or organized in State of Cali- 
fornia. 

[Endorsed]: Plaintiff's Exhibit No. 63. Filed 
5/29, 1940. R. S. Zimmerman, Clerk. By B. B. Han- 
sen, Deputy Clerk. 



Mr. Meserve: The same understanding or stipu- 
lation, Mr. Jewell, as to the State of California 
Bank and Franchise Tax Return for the calendar 
year 1935? 

Mr. Jewell: No objection that it is not the best 
evidence. 

Mr. Meserve: We will offer it as Plaintiff's Ex- 
hibit next in order. 

The Clerk Plaintiff's Exhibit 64 in evidence. 
(The document referred to was received in 
evidence and marked " Plaintiff's Exhibit No. 
64.") 



238 United States of America vs. 

(Testimony of J. Leslie Morris.) 

PLAINTIFF'S EXHIBIT No. 64 

State of California 

BANK AND CORPORATION FRANCHISE 
TAX RETURN 

This return must be filed with the Franchise Tax 
Commissioner within two months and fifteen days 
after the close of the income year, together with 
Remittance Payable to State Treasurer. 

(Space for name and address) 

1. Exact corporate title — J. Leslie Morris Co., 
Inc. Corporate number — 

2. Mail Address— 1361 So. Hope St., Los An- 
geles, Calif. 

3. Date of Incorporation — Oct. 14, 1925. 

4. Under laws of Calif. 

5. Date began business in California — Oct. 14, 
1925. 

6. Kind of business — Motor Bearings 

Copy Items 1 to 27 From Page 2, Corporation 
Federal Income Tax Return for the Year 1935, or 
the Fiscal Year Commencing and Ending 

Item Gross Income 

No. 

* # # # # # # 

[Endorsed]: Plaintiff's Exhibit No. 64. Filed 
5/29, 1940. R, S. Zimmerman, Clerk. By B. B. Han- 
sen, Deputy Clerk. 



Mr. Meserve : That is all. 



J. Leslie Morris Co., Inc. 239 

(Testimony of J. Leslie Morris.) 

Recross Examination 
By Mr. Jewell : 

Q. Mr. Morris, you stated that during the tax- 
able period you had no warehouse service. What did 
you mean? 

A. No warehouse service; that we did not have 
the warehouses you referred to yesterday during 
that period. Your question yesterday read: Do you 
have them? The answer was in the present tense. 

Q. Are you referring to warehouses in Boston, 
Kansas [234] City, Minneapolis, New Orleans? 

A. Yes. 

Q. At that time you had no warehouse service 
of the type described ? 

A. Yes, I had a chance to look it up overnight. 

Q. And all you did have were your own plants? 

A. Those six that you mentioned. 

Q. That's New York, Chicago, Columbus, Port- 
land, Seattle, and Los Angeles ? A. Yes. 

Q. Mr. Morris, when you stated that you had a 
guarantee onl 4 y as to materials and workmanship, 
you were referring to a guarantee that could be 
found where? 

A. I don't think we ever mentioned it, sir. It is 
common practice for the industry to guarantee ma- 
terial and workmanship on any work that is per- 
formed. I am very sure we never advertised it, be- 
cause it is not necessary. If we did, that is what it 
would cover. It is the practice of the repair indus- 
try to guarantee the materials they use, and the 
labor that is necessary to perform it. 



240 United States of America vs. 

(Testimony of J. Leslie Morris.) 

Q. And to your knowledge, there is no such guar- 
antee in any prospecti or advertising that you have ? 

A. I don't recall it at the moment. 

Mr. Jewell: That is all. 

Mr. Meserve: That is all from this witness. 

The Court: I want to ask a question on the 
warehouse [235] feature counsel asked about this 
morning. 

In these six units that have been mentioned here 
this morning, do you ship from Los Angeles to 
them any of these red boxes containing processed 
connecting rods? 

The Witness : Yes, we do. 

The Court: So then the only difference between 
the situation as it existed during the taxable period 
and that which later came up was that you had no 
warehouse in the sense that the receptacle did not 
do any processing itself, but simply received the 
product from you? 

The Witness: May I get that clear? 

The Court: Read it. 

(The question referred to was read by the re- 
porter, as follows: 

"Q. So then the only difference between the sit- 
uation as it existed during the taxable period and 
that which later came up was that you had no ware- 
house in the sense that the receptacle did not do 
any processing itself, but simply received the prod- 
uct from you?") 

The Witness: Yes. 



J. Leslie Morris Co., Inc. 241 

(Testimony of J. Leslie Morris.) 

The Court: Received the product from your 
manufactory here in Los Angeles, or one of these 
other six manufactories you have testified to? I am 
not using " manufacture" in any technical sense at 
all. 

The Witness: Yes; we did not have the six 
which I mentioned doing babbitting work right 
on the premises. We [236] had no warehouse stocks. 
That we did develop later on, after the taxable 
period. 

The Court: In these establishments that were 
doing babbitting on the premises, was the product 
that they sold or distributed to the trade exclu- 
sively the product which you fabricated on the 
premises, or did they receive some of your stock 
which had been fabricated ? 

The Witness: No, fabricated on the premises. 

The Court : They did not receive any stock from 
the Los Angeles stock? 

The Witness: No. I might qualify that. I be- 
lieve the New York branch toward the latter part 
of this taxable period did receive some shipments 
from Columbus, but that was all. Substantially they 
all did their own babbitting service. 

The Court: Then was there any difference, es- 
sential difference, between the method of distribu- 
tion through the warehouse than there was when 
you had no warehouse facilities? 

The Witness: No. Do you mean the conditions 
today? We had no warehouses at all at that time, 



242 United States of America vs. 

(Testimony of J. Leslie Morris.) 
other than in connecting with the babbitting estab- 
lishment. 

The Court: But you, did have a warehouse in 
connection with the babbitting establishments 

The Witness: We had what might be termed a 
shipping room, with stock on the shelves. 

The Court : I am differentiating between a ship- 
ping [237] room per se and a warehouse. By " ware- 
house," I mean this: A depository that receives a 
product from the place where it is manufactured 
or produced, and simply has it there for storage pur- 
poses to deliver as the occasion requires, as distin- 
guished from the place where the product is actu- 
ally produced. 

The Witness: We had none during the taxable 
period. 

The Court: But you did have, as I understand 
your testimony, — you did have, in connection with 
these branch organizations that you have testified 
to, these six, in addition to the tools that were pres- 
ent there with which to practice the method, a re- 
ceptacle, or a place, where the product as made, or 
as processed in Los Angeles, or in other factories, 
was stored for the purposes of emergency. 

The Witness: Yes, we sold it from that room, 
just as we have here. We have an accumulation of 
connecting rods babbitted, and the answer to your 
question, I think, is yes, we did. We had a shipping 
room, a stock room, with the stock in it, in con- 
nection with each one of these babbitting plants. 

The Court: But wouldn't it be as I said? I 
might not make the distinction, but what I am try- 



/. Leslie Morris Co., Inc. 243 

(Testimony of J. Leslie Morris.) 
ing to ascertain is whether, regardless of what we 
call it, whether we call it a warehouse or a branch 
factory, or a branch processing- place, or a machine 
shop or a garage, I am trying to ascertain whether 
there is any difference, insofar as the business [238] 
activity was concerned, when you used the facilities 
of a warehouse — what you call warehouse service, — 
I think counsel used that term. 

The Witness: Yes. 

The Court : The Court understands by warehouse 
service, a service where the connecting rod itself, 
and the parts that you process on it — the work isn't 
done there? 

The Witness : No. 

The Court: The instrumentality itself is there 
in a box and is stored in the warehouse ? 

The Witness: Yes. 

The Court: Where does that instrumentality 
come from to the warehouse? 

The Witness: It is shipped from the nearest 
plant. 

The Court: During the taxable period did you 
have that same facility in connection with the ma- 
chine shop that also practiced the method ? 

The Witness: Yes, sir. 

The Court: So that the machine shop in Chi- 
cago, we will say, had a warehouse into which is 
stored connecting rods that had been serviced by 
units of the business organization other than Chi- 
cago, is that right? 



244 United States of America vs. 

(Testimony of J. Leslie Morris.) 

The Witness: No, sir, because Chicago was the 
plant that had its own babbitting equipment, and 
they would have no rods in stock that they didn't 
babbitt right at Chicago. 

The Court: Would that be true with all of the 
other [239] places? 

The Witness: That would be true with all of 
the other places. 

The Court: All of the six? 

The Witness: All of the six that we spoke of, 
yes. 

The Court: That is all. 



Mr. Meserve : Mr. Jewell, w T ould it be acceptable 
as a statement, by the Government, that connecting- 
rods, as manufactured by the maker whose name 
appears on the rod, were subject to the tax provided 
by Section 606 of the Revenue Laws at the time of 
their original manufacture, if manufactured after 
the effective date of the Act ? 

Mr. Jewell: I would have no objections to the 
statement, but whether or not they were taxed is 
a matter I don't know. 

The Court: Taxable. 

Mr. Meserve : I said taxable ; were subject to the 
tax. I am not asking the Government to stipulate 
that the manufacturer paid the tax, because they 
may have evaded it. 

Mr. Jewell: I hesitate to state which particu- 



J . Leslie Morris Co., Inc. 245 

lar taxing statute was used by the particular Col- 
lector as to General Motors, Ford, or any of the 
automobile manufacturers. I am not familiar with 
the levying of that type of tax, because I have never 
happened to have the occasion to have a case of 
that type. 

The Court: It would not make any difference 
about the [240] activity of the Collector or Com- 
missioner. He isn't the law. He is speaking about 
the effect of the law, of the statute. 

Mr. Jewell: I am not the Court. I can't give 
a legal opinion about the matter. 

The Court: He isn't asking you about that at 
all. He is trying to save a lot of time, which I think 
is perfectly proper, if he can be saved. Section 
606 as it appeared at the applicable time, as I read 
it here, reading from Title 26 U. S. C. A., denomi- 
nated Manufacturers' Excise Taxes; Act of 1932, 
Section 606. Tax on Automobiles, etc. "There is 
hereby imposed upon the following articles sold 
by the manufacturer, producer, or importer, a tax 
equivalent to the following percentages of the price 
for which so sold : 

"(a) Automobile truck chassis and automo- 
bile truck bodies (including in both cases parts 
or accessories therefor sold or in connection 
therewith or with the sale thereof.), 2 percen- 
tum. A sale of an automobile truck shall, for 
the purposes of this sub-section, be considered 
to be a sale of the chassis and of the body." 



246 United States of America vs. 

The remaining portions of the Act, as they are 
found in this volume which I am reading from, re- 
late to amendments which occurred subsequently. 
Is it conceded by both of you that the provision 
which I read was the selling provision that was in 
effect during the applicable taxable times involved 
in this case ? [241] 

Mr. Meserve: There is Section (c), Section 606. 
The Court: Is (c) the same as the old Act, as 
it now is? 

Mr. Jewell : I believe it w^as. 
Mr. Meserve: That is correct. 
The Court : That reads : 

"(c) Parts or accessories (other than tires 
and inner tubes) for any of the articles enum- 
erated in Sub-Section (a) or (b), 2 percentum. 
For the purposes of this sub-section and Sub- 
Sections (a) and (b), sparkplugs, storage bat- 
teries, leaf springs, coils, timers, and tire chains, 
which are suitable for use on or in connect ion 
with, or as component parts of, any of the ar- 
ticles enumerated in Sub-Section (a) or (b), 
shall be considered parts or accessories, for such 
articles, whether or not primarily adapted for 
such use. This sub-section shall not apply to 
chassis or bodies for automobile trucks or other 
automobiles. Under regulations prescribed by 
the Commissioner, with the approval of the 
Secretary, the tax under this sub-section shall 
not apply to the case of sales of parts or ac- 
cessories by the manufacturer, producer, or im- 



/. Leslie Morris Co., Inc. 247 

porter to a manufacturer or producer of any 
of the articles enumerated in Sub-Section (a) 
or (b). If any such parts or accessories are 
resold [242] by such vendee otherwise then on 
or in connection with, or with the sale of, an 
article enumerated in Sub-Section (a) or (b), 
and maunfactured or produced by such vendee, 
then for the purposes of this section, the ven- 
dee shall be considered the manufacturer or 
producer of the parts or accessories so re- 
sold." 

Now, is it conceded that these three sections in 
the statute, as they appear in this volume, were the 
statutes that were in effect at the time of the ap- 
plicable taxable period? 

Mr. Jewell: That's conceded. 

Mr. Meserve : That is conceded. 

The Court: What is the other part, of your re- 
quest for a stipulation? 

Mr. Meserve: That the tax on connecting rods 
that were used in connection with Plaintiff 's busi- 
ness, that bore the name of a manufacturer, either 
by identification number or name, were subject 
to the tax as to the rods that were manufactured, 
after the effective date of the Act, my point being, 
in explanation, that the connecting rods were tax- 
able. We don't know whether the tax was paid that 
was issued. We are not asking the Government to 
say that. They may have evaded it. I have talked this 
over with Mr. Jewell, but we want it understood 
that there was tax collectible and levied on that 



248 United States of America vs. 

connecting rod, as an automotive part, [243] by 
the manufacturer thereof before it came in to us for 
rebabbitting by the Plaintiff corporation, and that 
connecting rod had actually been manufactured aft- 
er 1932, or the effective date of the Act. Do I make 
myself clear? 

The Court, : I understand what you say. 

Mr. Jewell: I have no right to make any such 
concession. I don't think it would be much of a 
concession. All he is asking me for is a legal opin- 
ion by way of stipulation or concession. I assume 
that they were taxed, and are taxable or were tax- 
able. 

The Court: I think you are correct. I think 
it is a legal conclusion. 

Mr. Jewell: Furthermore, it has no materiality 
unless it was taxed. Merely being taxable is not 
sufficient. 

Mr. Meserve: If w T e accept it as a legal conclu- 
sion, I am perfectly satisfied. 

The Court: You can accept this from the Court, 
that it was taxable. 

Mr. Meserve : Thank you. 

Mr. Jewell : But not from counsel. 

Mr. Meserve: Plaintiff rests. 

The Court: I want it understood, in connection 
with that last statement, so that both of you will 
not be misled, that the Court is referring to what 
it calls new connecting rods and is not referring 
to reconditioned or reprocessed or later as- 
sembled connecting rods; but it is referring 
to the [244] instrumentality as it either comes in 
the vehicle or as it comes separate and apart from 



/. Leslie Morris Co., Inc. 249 

the vehicle, from the manufacturer to its dealers, 
whoever they may be, or to the consumer, whoever 
he may be. 

Mr. Meserve: That is correct. That's the way we 
understand it. 

The Court: All right. 

(Discussion as to time of argument and briefs, 
omitted from transcript.) 

The Court: There is only one point which Mr. 
Morris discussed, where he felt he had not ex- 
pressed himself as Mr. Meserve thought he had. I 
think that should be cleared up, and the record tran- 
scribed as to that. 

Mr. Meserve: I think it has been cleared up by 
the correction. 

The Court: It has been cleared up so far as 
Mr. Morris is concerned. It has not been cleared 
up so far as the Court is concerned. Over the noon 
hour you probably can get the reporter to give you 
the portion of the testimony — either read his notes 
to you, or have them transcribed so that they can 
be used. I think we will have the oral argument 
this afternoon for such time as I feel I should have, 
with the limitation by the Court as to what is rea- 
sonable. I want to say this now, so that you can mar- 
shal your arguments within the scope that is in the 
Court's mind: Of course, the burden is on the tax- 
payer in this case, because [245] he has brought 
the action and he must show, so far as the factual 
situation is concerned, by a preponderance of the 
evidence, that he was not a manufacturer or pro- 
ducer within the meaning of the statute which has 



250 United States of America vs. 

been read. On the other hand, if there is a ques- 
tion where factually there is a very close balance, 
the Court is going to give the taxpayer the bene- 
fit of it. I don't know whether that question will 
arise or not, but those are two questions of fact 
that you gentlemen should address yourselves to. 
The legal situation can be argued as you desire, with 
particular attention paid to these conflicting deci- 
sions that have been cited by the Commissioner. We 
will meet at 2:00 o'clock. 

(Whereupon, at 12:00 o'clock noon a recess was 
taken until 2:00 o'clock p. m. of the same date.) 

[246] 
Los Angeles, California 
Wednesday, May 29, 1940 
2:00 O'Clock P.M. 
Mr. Meserve: With your Honor's permission, I 
would like to have the case reopened on behalf of 
the plaintiff corporation to clear one matter we dis- 
cussed with reference to the use of the phrase "Your 
own rods," as w r e were discussing this morning. 
The Court: No objection. 
Mr. Jewell: No objection. 

LESLIE J. MORRIS 

the witness on the stand at the time of recess, hav- 
ing been previously duly sworn, resumed the stand 
and further testified as follows : 

Direct Examination 
By Mr. Meserve: 

Q. Mr. Morris, on cross examination you were 
asked the following question by Mr. Jewell on be- 



J. Leslie Morris Co., Inc. 251 

(Testimony of J. Leslie Morris.) 

half of the Government : "Q. Have any dealers ever 

sent you any rebabbitted rods?" 

And your answer was: "A. Yes, sometimes they 
have sent some of our own, which we have rebab- 
bitted for them." 

I attempted this morning to have you inform us 
what you meant by that phrase, "some of our own." 
Will you explain that answer % 

A. Yes, it is perfectly clear to me now. I meant 
[247]' when we went over to purchase a connecting 
rod to send to some person who had bought them 
from us, and we did not have them in our stock, 
that they would quite frequently sell to me a con- 
necting rod which I had rebabbitted for them just 
previously, or possibly a month previous or a week. 
That is what I meant. I did not mean they were 
rods I had ever furnished them. They had sent 
them to me to rebabbitt and they took them back, 
of course, when I rebabbitted them; and when I 
needed it for some other customer, they would send 
it back. I have heard the clerk say, "You can't 
complain about the rebabbitting on these rods, be- 
cause you did it yourself." 

Q. What price did you pay on that occasion? 

A. Paid exactly the same price as if taken out 
of stock, which had come from the factory ; in other 
words, I paid the retail price on the connecting rod, 
because I was buying from them ; both the connect- 
ing rod itself, and the babbitting service. 

The Court: You paid to them your list price? 

The Witness: Yes, our list price, because that 
was just about the same as theirs. 



252 United States of America vs. 

(Testimony of J. Leslie Morris.) 

The Court : Just about the same 1 

The Witness: I paid their list price, not ours 
for the sale of the connecting rod. 

The Court: How did their list price compare 
with yours? 

The Witness : About the same. I am speaking of 
the [248] complete unit, That would be our service 
for the babbitting, and a deposit for the connect- 
ing rod; those two added would be just about what 
you would pay the agents for the connecting rod. 

By Mr. Meserve : 

Q. Referring further, Mr. Morris, to the same 
examination, this question was asked : 

"Q. That occurred on occasions when you wanted 
to purchase rods to keep your supply built up to fa- 
cilitate your exchange service?" 

And your answer was : 

"A. That is right. 

U Q. They have shipped you one of your own 
rods?" 

In using that same phrase, "one of your own 
rods," you had the same reference to that same 
arrangement you have just now explained? 

A. One which we have babbitted. 

The Court : That was the question. 

Mr. Meserve: The answer was "A. They have 
shipped us a great many of them. We have gotten 
them back many times." 

The Witness : I mean the rods that we have bab- 
bitted for them they sold to us. 

The Court: That is all. [249] 



J. Leslie Morris Co., Inc. 253 

(Testimony of J. Leslie Morris.) 

Cross Examination 
By Mr. Jewell : 

Q. You indicated that the rods which you ob- 
tained in that fashion from the dealer were rods 
which they had sent to you, and you had rebabbit- 
ted and sent them back. You don't mean to imply 
that those were necessarily the same rods which 
they sent to you, but they were rods which they 
had merely, perhaps, received back in place of the 
rods which they had sent to you of the same size. 

The Court: That is too involved. Can't you sim- 
plify that? 

The Witness: It would mean the same thing. 

By Mr. Jewell : 

Q. You implied there that the rods that you have 
purchased from the dealer were rods which they 
had sent to you, which you had rebabbitted and 
sent back? A. Yes. 

Q. Did you mean exactly that? 

A. For this reason, to visualize the transaction 
as it would happen: The rods which we had to get 
from them would be invariably later model rods, 
rods that were hard to get; that they had not sold 
yet. In fact, I would send over an order for two 
sets, and they would give me one, and would tele- 
phone and say, "Morris, we have only two. We can't 
let you have them. We need one." But they would 
send that one over willingly, to have me babbitt- 
that, and [250] put it back in stock. 

Q. The connecting rods you would have occa- 



254 United States of America vs. 

(Testimony of J. Leslie Morris.) 

sion to purchase would fall within the 10 per cent ? 

A. Yes. If it was a rod which I had plenty of, 
I would probably not be buying over there. I 
couldn't determine whether I had babbitted them 
myself or not. 

Mr. Jewell : That is all. 

The Court: Is that all, gentlemen? 

Mr. Meserve : That is all. 

(Witness excused.) 

[Endorsed] : Filed Mar. 25, 1941. [251] 



[Endorsed]: No. 9746. United States Circuit 
Court of Appeals for the Ninth Circuit. United 
States of America, Appellant, vs. J. Leslie Morris 
Company, Inc., a corporation, Appellee. Transcript 
of Record. Upon Appeal from the District Court 
of the United States for the Southern District of 
California, Central Division. 

Filed February 17, 1941. 

PAUL P. O'BRIEN, 

Clerk of the United States Circuit Court of Ap- 
peals for the Ninth Circuit. 



J. Leslie Morris Co., Inc. 255 

In the United States Circuit Court of Appeals 
for the Ninth Circuit 

No. 9746 

(District Court— No. 433-M) 

UNITED STATES OF AMERICA, 

Appellant, 
vs. 

J. LESLIE MORRIS COMPANY, INC., 

Appellee. 

STATEMENT OF POINTS UPON WHICH 
APPELLANT INTENDS TO RELY ON AP- 
PEAL. 

Pursuant to Rule 19, subdivision 6 of the Rules 
of the Circuit Court of Appeals for the Ninth Cir- 
cuit, the following is the statement of points upon 
which appellant intends to rely on appeal : 

I. 

The court erred in determining that the sales of 
connecting rods by the appellee, during the tax- 
able period involved herein, were not sales of auto- 
mobile parts or accessories by a manufacturer with- 
in the purview of Section 606 (c) of the Revenue 
Act of 1932. 

Dated: February 5, 1941. 

WILLIAM FLEET PALMER, 

United States Attorney. 
E. H. MITCHELL, 

Assistant United States Attorney. 



256 United States of America vs. 

ARMOND MONROE JEWELL, 

Assistant United States Attorney. 
By ARMOND MONROE JEWELL, 

[Endorsed] : Piled Feb. 17, 1941. Paul P. O'Brien, 
Clerk. 



[Title of Circuit Court of Appeals and Cause.] 

APPELLANT'S DESIGNATION OF THE MA- 
TERIAL PORTIONS OF THE RECORD ON 
APPEAL WHICH ARE, THEREFORE, TO 
BE PRINTED. 

Pursuant to the provisions of Rule 19, Subdivision 
6, of the Rules of the United States Circuit Court 
Of Appeals For The Ninth Circuit, Appellant here- 
by designates those portions of the Record On Ap- 
peal in above entitled cause which it desires printed 
in the Transcript Of Record, as follows : 

1. Complaint (R. pp. 2 to 15, inclusive) 

2. Answer (R. pp. 17 to 25, inclusive) 

3. Substitution of Attorneys (R. pp. 27 and 28) 

4. Order for Judgment (R. p. 32) 

5. Conclusions of the Court (R. pp. 33 to 36, 
inclusive) 

6. Findings of Fact, and Conclusions of Law 
(R. pp. 37 to 55, inclusive) 

7. Judgment (R. p. 56) 

8. Notice of Apeal (R. p 57) 



J. Leslie Morris Co., Inc. 257 

9. Orders Extending Time To File Record And 
Docket Cause On Appeal (R. pp. 58 and 59) 

10. Order Permitting Originals To Be Sent To 
Circuit Court In Lieu Of Copies (R. p. 60) 

11. Designation of Record On Appeal (R. pp. 
61 and 62) 

12. Plaintiff's Exhibits 1 to 32, inclusive 

Note: Please print these exhibits in the same 
manner as in the case of United States of 
America vs. Armature Exchange Inc., No. 
9469. 

13. Plaintiff's Exhibit 43, print: one invoice (the 
second from the top). 

14. Plaintiff's Exhibit 45, print: all of the top 
page; and first inside page down to and including 
the line commencing with Stock No. 25; and the 
statement at the bottom of the last page. 

15. Plaintiff's Exhibit 47, print: all of the top 
page. 

16. Plaintiff's Exhibit 49, print: all of the out- 
side of the top cover; all of the inside of the top 
cover; and all of both sides of the next page which 
follows the top cover; and "Page 1" down to and 
including the line containing the listings opposite 
the name "Ajax"; also the inside of the back cover. 

17. Plaintiff's Exhibit 50, print: picture of box 
showing the label on its end. 

18. Plaintiff's Exhibit 55, print: the heading at 



258 United States of America vs. 

the top merely down to and including the line oppo- 
site the word "Assets". 

19. Plaintiff's Exhibit 61, print : all. 

20. Plaintiff's Exhibit 62, print: top page down 
only to and including the line opposite Item 6. 

21. Plaintiff's Exhibit 63, print: top page down 
only to and including the line opposite Item 6. 

22. Plaintiff's Exhibit 64, print: top of the first 
page of the printed form down to the words "Gross 
Income" which are printed in the center of the page 
in large type. 

23. Defendant's Exhibit A, print: the invoice 
that is second from the top. 

24. Defendant's Exhibit B, print: down through 
paragraph "Second". 

25. Defendant's Exhibit C, print: top page down 
only through the line opposite Item 6. 

26. Defendant's Exhibit D, print: top page of 
printed form down only to the words "Gross In- 
come" which are printed in the center of the page 
in large type. 

27. Defendant's Exhibit E, print: top page of 
printed form down only to the words "Gross In- 
come" which are printed in the center of the page 
in large type. 

28. Defendant's Exhibit F, print: top page of 
printed form down only to the words "Gross In- 
come" which are printed in the center of the page 
in large type. 



J. Leslie Morris Co., Inc. 259 

29. All of the Reporter's Transcript, Excepting 
and Omitting the following portions: p. 70, 1. 13 
to p. 84, 1. 5; p. 85, 1. 20 to p. 97, 1. 11; p. 98, 1. 10 
to p 102, 1. 1 ; p. 103, 1. 8 to p. 105, 1. 21 ; p. 189, Is. 
13 and 14. 

Dated: February 5, 1941. 

WILLIAM FLEET PALMER, 

United States Attorney. 
E. H. MITCHELL, 
Assistant United States Attorney. 

ARMOND MONROE JEWELL, 
Assistant United States Attorney. 
By ARMOND MONROE JEWELL. 

[Endorsed]: Filed Feb. 17, 1941. Paul P. O'Brien, 
Clerk. 



[Title of Circuit Court of Appeals and Cause.] 

APPELLEE'S DESIGNATION OF MATERIAL 
PORTION OF THE RECORD TO BE 
PRINTED IN ADDITION TO PORTION 
OF RECORD DESIGNATED BY APPEL- 
LANT. 

Pursuant to the provisions of Rule 19, Subdivision 
6, of the Rules of the United States Circuit Court 
of Appeals for the Ninth Circuit, appellee hereby 
designates that portion of the record on appeal in 
the above entitled cause which it desires printed in 
the transcript of record in addition to the portions 
of the record designated by appellant, as follows: 



260 United States of America vs. 

1. That portion of the Reporter's Transcript, to 
wit: p. 85, 1. 20 to p. 97, 1. 11, said portion of the 
Reporter's Transcript having been omitted by ap- 
pellant in its designation, (see 1. 20, p. 3, appellant's 
designation) 

Dated: February 24, 1941. 

DARIUS JOHNSON AND 
MESERVE, MUMPER & 
HUGHES. 
By E. AVERY CRARY 

Attorneys for Appellees. 

[Endorsed]: Filed Feb. 25, 1941. Paul P. O'Brien, 
Clerk. 






No. 9746. 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



United States of America, 

Appellant, 
vs. 

J. Leslie Morris Company, Inc., a corporation, 

Appellee. 



BRIEF FOR THE UNITED STATES. 



Samuel O. Clark, Jr., 
Assistant Attorney General. 

J. Louis Monarch, 
George H. Zeutzius, 
Special Assistants to the Attorney General. 
Washington, D. C, 

Wm. Fleet Palmer, 

United States Attorney. 
E. H. Mitchell, 

Assistant United States Attorney, 
Armond Monroe Jewell, 

Assistant United States Attorney. 
United States Post Office and Court House 
Building, Los Angeles, 

Parker & Baird Company, Law Printers, Los Angeles. 



TOPICAL INDEX. 

PAGE 

Opinion below 1 

Jurisdiction 1 

Question presented 2 

Statute and regulations involved 2 

Statement 2 

Statement of points to be urged 17 

Summary of argument 18 

Argument 20 

I. 

The transactions involved constituted sales of automobile parts 
within the meaning of the statute, which is a revenue meas- 
ure exclusively, and is to be construed accordingly 20 

II. 

Appellee is the manufacturer or producer of the Moroloy con- 
necting rods sold by it and not merely a repairer of second- 
hand, damaged and worn-out connecting rods 31 

III. 

The applicable decisions support the contention that appellee 
is a manufacturer or producer of automobile parts within 
the purview of the taxing statute 37 

IV. 

The Government's position is also supported by the Treasury 
Regulations which in the light of the history and reenact- 
ment of the taxing provisions without material change have 
been given Congressional approval 48 

Conclusion 52 



11. 

TABLE OF AUTHORITIES CITED. 

Cases. page 

Armature Rewinding Co. v. United States, decided Sept. 30, 
1940 47 

Bardet v. United States, decided May 18, 1938 46 

Becker-Florence Co. v. United States, decided Dec. 27, 1938 46 

Biltrite Tire Co. v. The King, 1937 Canada Law Rep. 364....3S, 44 

Cadwalader v. Jessup & Moore Paper Co., 149 U. S. 350 

32, 39, 40 

Carbon Steel Co. v. Lewellyn, 251 U. S. 501 29 

City of Chicago v. Reinschreiber, 121 111. App. 114 42 

City of Duluth v. Bloom, 55 Minn. 97 42 

City of Louisville v. Zinmeister & Sons, 188 Ky. 570 42 

Clawson & Bals v. Harrison, 108 Fed. (2d) 991, certiorari 
denied, 309 U. S. 685 23, 27, 32, 33, 34, 35, 37, 38, 43, 51 

Con-Rod Exchange, Inc. v. Henricksen, 28 Fed. Supp, 924.-46, 47 

Cotton Tie Co. v. Simmons, 106 U. S. 89 40 

Davis Electrical Works v. Edison Elec. Light Co., 60 Fed. 276—. 41 

Edelman & Co. v. Harrison, decided April 7, 1939 37 

Federal Mogul Corp. v. Kavanagh 44 

Federal Mogul Corp. v. Smith, decided Fed. 23, 1940 34, 35, 38 

First Nat. Bank, In re, 152 Fed. 64 43 

Foss-Hughes Co. v. Lederer, 287 Fed. 150 39 

Founders General Co. v. Hoey, 300 U S. 268 28 

Hartranft v. Wiegman, 121 U. S. 609 47 

Helvering v. Reynolds Tobacco Co., 306 U. S. 110 50 

Hempy-Cooper Mfg. Co. v. United States, decided May 6, 1937 46 

Hughes & Co. v. City of Lexington, 211 Ky. 596 29 

King, The v. Biltrite Tire Co., 1937 Canada Law Rep. 1 38, 44 



111. 

PAGE 

King, The, v. Boultbee, Ltd. (1938), 3 Dominion Law Rep. 664 
32, 38 

Klepper v. Carter, 286 Fed. 370 39 

Melnick v. City of Atlanta, 147 Ga. 525 42 

Monteith Brothers Co. v. United States, decided Oct., 1936 46 

Moore Bros., Inc. v. United States, decided May 14, 1940 38 

Motor Mart v. United States, decided May 14, 1940 38 

Raybestos-Manhattan Co. v. United States, 296 U. S. 60 28 

Stone v. White, 301 U. S. 532 30 

S. & R. Grinding & Machine Co. v. United States, 27 Fed. 
Supp. 429 44 

Turner v. Quincy Market Cold Storage & Warehouse Co., 225 
Fed. 41 29 

Tyler v. United States, 281 U. S. 497 28 

United States v. Armature Exchange, 116 Fed. (2d) 969, cer- 
tiorari denied, May 5, 1941 19, 23, 26, 32, 37, 46, 47, 50 

United States of America v. Moroloy Bearing Service of Oak- 
land, No. 9786 23 

Ward, Ltd. v. Midland R. Co., 33 T. L. R. 4 41 

Statutes. 

Internal Revenue Code: 

Sec. 3400 (U.S.C., Supp. V, Title 26, Sec. 3400) 26 

Sec. 3403 (U.S.C, Supp. V, Title 26, Sec. 3403) 50 

Revenue Act of 1918, c. 18, 40 Stat. 1057, Sec. 900 49 

Revenue Act of 1921, c. 136, 42 Stat. 227, Sec. 900 49 

Revenue Act of 1924, c. 234, 43 Stat. 253, Sec. 600 49 

Revenue Act of 1926, c. 267, 44 Stat. 9, Sec. 600 49 

Revenue Act of 1928, c. 852, 45 Stat. 791, Sec. 421 49 



IV. 

PAGE 

Revenue Act of 1932, c. 209, 47 Stat. 169 : 

Sec. 606 2, 16, 17, 20, 30, 38, 50, 51 

Sec. 623 24 

Sec. 1111 25 

Revenue Act of 1939, c. 247, 53 Stat. 862, Sec. 1 50 

Revenue Act of 1940, c. 419, 54 Stat. 516: 

Sec. 209 50 

Sec. 210 50 

Sec. 216 50 

Miscellaneous. 

56 Corpus Juris 884-885 41 

S. T. 606, XI-2 Cum. Bull. 476 (1932) 51 

S. T. 648, XII-1 Cum. Bull. 384 (1933) 51 

S. T. 812, XIV-1 Cum. Bull. 406 (1935) 51 

S. T. 896, 1940-2 Cum. Bull. 252 51 

Treasury Regulations 46 (1932 Ed.) : 

Art. 2 25 

Art. 4 25, 26, 48, 49, 50 

Art. 7 39, 48 

Art. 41 25 

Treasury Regulations 46 (1940 Ed.), Sec. 316.4 26, 48 

Treasury Regulations 47 (1926 Ed.), Art. 26 49 

Judicial Code, Sec. 128 1 



INDEX TO APPENDIX. 

Revenue Act of 1932, c. 209, 47 Stat. 169, Sec. 606 1 

Treasury Regulations 46, approved June 18, 1932, Art. 4 1 

Treasury Regulations 46, approved June 18, 1932, Art. 41 2 



No. 9746. 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



United States of America, 

Appellant, 
vs. 

J. Leslie Morris Company, Inc., a corporation, 

Appellee. 



BRIEF FOR THE UNITED STATES. 



Opinion Below. 

The memorandum opinion of the District Court [R. 
32-36] is unreported. 

Jurisdiction. 

This is an appeal from a judgment of the District 
Court entered August 21, 1940 [R. 61-62], in favor of 
appellee for the refund of $1,500 assessed and paid as 
manufacturer's excise taxes. Notice of appeal was filed 
November 19, 1940. [R. 62-63.] Orders extending the 
time for filing and docketing the record on appeal were 
duly obtained. [R. 63-64.] The jurisdiction of this 
Court is invoked under Section 128 of the Judicial Code, 
as amended February 13, 1925. 



— 2— 

Question Presented. 

Whether sales of automobile connecting rods by appel- 
lee were taxable under Section 606(c) of the Revenue 
Act of 1932, which imposed a tax upon automobile parts 
"sold by the manufacturer, producer, or importer'' 
thereof. 

Statute and Regulations Involved. 

These are set forth in the Appendix, infra, pp. 1-2. 

Statement. 

The case was tried to the court without a jury upon 
evidence consisting of the testimony of two witnesses 
offered by appellee and numerous exhibits offered by each 
of the parties. The court rendered a memorandum opin- 
ion [R. 32-36] and filed findings of fact and conclusions 
of law [R. 36-60] in favor of appellee. The facts, as 
disclosed by the undisputed evidence, may be summarized 
as follows: 

Appellee was incorporated in 1925 [R. 77], under the 
laws of California to "operate a business for the manu- 
facture, sale and distribution of automotive and industrial 
bearing metals and products" and to "operate branch 
plants and offices in the State of California and elsewhere 
for the manufacture, sale and distribution of such metals 
and products." [R. 37.] Its principal place of business 
was in Los Angeles. [R. 37.] During the taxable period, 
it was engaged in producing [Pltf's Ex. 49] and selling 
[R. 39, 45, 59] automobile connecting rods, under the 
copyrighted trade name "Moroloy" [Pltf's Ex. 49; R. 193, 
218], throughout the United States to wholesalers, known 
also as jobbers [R. 79, 102, 172] on the exchange basis 



— 3— 

of sale [Pltf's Ex. 49; R. 84, 197], for replacement [R. 
177] purposes in connection with the repairing of auto- 
mobile motors by garage men and mechanics [R. 83, 85], 

A connecting rod is the means of transmitting energy 
created by the explosion of gas and air in the cylinder in 
the piston head, to the crank shaft. It connects the piston 
(by being attached to the crank pin) to the crank shaft. 
[R. 89.] There is a babbitt bearing (known as the crank 
shaft bearing) in the large end of the connecting rod. 
[Pltf's Ex. 34.] The babbitt bearing is within the parts 
of the rod known as the cap and shank which are held 
together by two bolts and nuts. [R. 108.] The smaller 
end of all rods is known as the wrist pin end. At least 
half of the rods produced by appellee during the taxable 
period had bronze bushings in the smaller end of the shank 
[Plft's Ex. 26], such as in the case of Ford rods [Pltf's 
Ex. 31], and some of the rods were of the type which 
required shims [R. 174-175]. 

Appellee owned and operated plants or factories in Los 
Angeles, New York, Chicago, Columbus, Portland, and 
Seattle, for the carrying on of its connecting rod opera- 
tions and sales [R. 163, 239, 241] and was affiliated with 
various other plants throughout the United States and 
Canada which it did not own [R. 43-44, 189, 192-193]. 
One of the affiliated plants is at 2354 Valley Street, Oak- 
land, California. 1 [R. 189, 194.] The Oakland plant 
pays appellee a monthly royalty of 2% on its operations. 
[R. 194.] Appellee handled its customers in exactly the 
same way as did the Federal Mogul Corporation and auto- 



!This is the Moroloy Bearing Service of Oakland, Ltd., which is appellee 
in a similar case now pending in this Court on the Government's anneal 
No. 9786. ' 



—A— 

mobile manufacturers who engaged in similar business on 
the exchange basis of sale for automobile replacement 
parts. [R. 197.] 

This case is concerned only with sales by appellee of 
automobile connecting rods during the period June 21, 
1932, to August 21, 1935. [R. 39, 45, 59.] It involves 
appellee's stock of connecting rods produced from a com- 
bination of new and used materials and sold to jobbers on 
the exchange basis of sale for use by garage men and 
mechanics in repairing automobiles. [Pltf's Exs. 1-32; R. 
84, 197, 242.] 

At Los Angeles, appellee had 12 to 14 persons engaged 
in its production processes, including shipping and receiv- 
ing. [R. 168.] There were about 20 employees in the 
shop and office, together. [R. 167.] It employed about 
18 persons at its Chicago plant and fewer persons at the 
four remaining plants. [R. 168.] It did not employ 
salesmen directly but did on a commission basis. [R. 171.] 
The latter represented three or four different automotive 
people and would sell to wholesalers. [R. 171.] Since the 
taxable period, appellee has conducted part of its sales 
through warehouses on consignment in various cities where 
it has no plants. 

In its operations, appellee uses divers pieces of equip- 
ment, tools and machinery, including among other things 
lathes, drill presses, arbor presses, milling machines, 
grooving machines, hydraulic broaching machines, specially 
built centrifugal casting machines, molds, slotting tools, 
circular saws, cutting tools, babbitt pots, grinding wheels 
and chamfering tools. [R. 40, 42, 43; Pltf's Exs. 1 to 
32.] 



— 5— 

At its Los Angeles plant appellee produced about 400 
rods a day. [R. 170.] Its Chicago plant produced about 
the same number. [R. 164.] The Moroloy rods followed 
the same line of operations as did rods comprised of en- 
tirely new materials, so far as appellee's operations were 
concerned. [R. 218.] 

In connection with its processes, appellee purchased and 
used new babbitt metal (consisting of tin, copper and 
antimony), new shims, new nuts, new bolts and new bronze 
bushings. [R. 138, 174, 197, 199, 214, 221, 223.] It 
also used solutions of hydrochloric acid, oakite and rust 
preventives. [Pltf's Exs. 8, 14 and 20.] The used shanks 
and caps, known also as forgings, which were utilized in 
its processes either were purchased by appellee from people 
who made it their business to obtain them from wrecked 
cars for the purpose of reselling them to appellee and 
others engaged in similar business [R. 175, 183], or were 
obtained by appellee from its jobbing customers who 
turned them in on their purchases from appellee of com- 
pleted rods of similar type on what is known in the trade 
as the exchange basis of sale for replacement parts [R. 
119-121, 196-197; Pltf's Ex. 49]. 

Appellee maintained a stock of hundreds of different 
types of connecting rods and assigned to each a stock 
number of its own, such as Stock No. 525, Stock No. 526, 
etc., covering nearly all makes of automobiles. [Pltf's Ex. 
49; R. 242.] Appellee's connecting rods were known by 
and sold to the trade under appellee's own stock numbers 
and copyrighted trade name "Moroloy." [Pltf's Ex. 49.] 
The connecting rods sold by appellee functioned just as 
efficiently as a rod of original manufacture. [R. 218.] 
The rods were sold in appellee's own boxes, which con- 



tained its stock number which conformed to the number 
in appellee's catalogs and price lists. [R. 128-129, 144- 
146.] Appellee guaranteed its product against defective 
workmanship and material in the same manner as did 
others in the industry. [R. 179.] If someone ordered a 
rod which appellee did not have in stock, appellee purchased 
either an entirely new rod or one comprised of both new 
and used materials from a nearby dealer or distributor for 
the purpose of filling the order. This occurred only now 
and then with respect to the latest models. [R. 104.] 

The following is a summary of appellee's processes and 
operations which culminated in the production of Moroloy 
connecting rods from a combination of used forgings of 
dismantled connecting rods and new materials: 

Automobile wrecking brokers 2 [R. 104, 175; Pltfs Ex. 
43, R. 124-126] and jobbers were appellee's source of 
supply for the used forgings [R. 106, 196-197]. A very 
few were received from automobile dealers. [Pltfs Ex. 
1.] They were received by appellee in lots averaging from 
twenty to sixty rods per package and were brought either 
by the shippers' own delivery service, by parcel post, 
trucking companies, or other delivery services. f Pltfs 
Ex. 1.] About half of the babbitt bearing of the average 
used rod was burned off or worn away when received by 
appellee. [R. 200.] Half of the used rods had bronze 
bushings at their smaller end and these, too, were worn 
when they were received. [R. 223; Pltfs Ex. 26.] Both 
the bronze bushing and the babbitt bearing are bearings 
and it is necessary in order for a rod properly to perform 
its function that the bushing, as well as the babbitt bear- 
ing, be in first-class shape. [R. 223-224.] 



2 Automobile wreckers are known in the trade as "junkies.' 



— 7— 

Upon arrival, the used rods were checked against the 
shipper's invoice and the boxes in which shipped and any 
accompanying identification tags were discarded. [Pltf's 
Ex. 2.] If any of the rods were cracked, bent, or broken, 
appellee would not accept them but would return them to 
the sender. [R. 107.] The shank and cap had to be in 
good condition. [R. 107.] The used rods were segregated 
according to their respective sizes or types and the thin 
type bronze pin bushings were removed by means of a 
cold chisel and hammer [Pltf's Ex. 3], whereas the 
heavier type of bushings was removed on an arbor press 
[Pltf's Ex. 4]. The two nuts and two bolts which 
fastened the cap to the shank of each rod were removed. 
A power driven socket wrench was used to remove the 
nuts. [Pltf's Ex. 5.] The nuts and bolts which were in 
good condition were thrown into a box for later use. 
[R. 173.] No effort whatsoever was made to keep the 
nuts and bolts separated so that thereafter they could be 
placed back on the identical rod forging. [R. 173.] 
Auxiliary bolts and nuts, which previously had been dipped 
in solder, then were placed temporarily on the rods for 
the purpose of subsequent operations. Otherwise, the 
salvaged nuts and bolts would become immersed in solder 
during the centrifugal casting operations and it was 
desired that the appearance of the completed Moroloy rod 
should resemble as nearly as possible the original condition. 
[Pltf's Ex. 5.] Both loosening and tightening of all nuts 
and bolts were accomplished by means of a power driven 
socket wrench. 

Two operations were involved in removal of the used 
babbitt bearing. The babbitt bearing end of the rod was 
placed in a pot of molten babbitt of low temperature pre- 



pared each day by lighting a gas oven at five o'clock in the 
morning in preparation for the day's run. [Pltf's Ex. 6.] 
Such of the babbitt as was removed by placing the unit 
in the low temperature pot was salvaged for the purpose, 
subsequently, of mixing it with newly purchased babbitt 
in proportions of half and half. [R. 200; Pltf's Ex. 6.] 
The analysis of the old babbitt, thus salvaged, was exactly 
the same as that of the new babbitt. [R. 200.] After 
most of the babbitt was removed by the first operation, the 
remaining babbitt clinging to the large opening in the 
cap and shank was removed by dipping the large end of 
the forging into pots containing a solution of molten 
babbitt of a higher temperature. [Pltf's Ex. 6.] The 
reason for removal of the babbitt by two operations was 
that the babbitt in the low temperature receptacle could be 
used again while the babbitt subjected to the higher tem- 
perature became spoiled for further use. [Pltf's Ex. 6.] 

After removal of all babbitt, the large end of the rod 
was cleaned by dipping it into a vat containing a solution of 
hydrochloric acid. [Pltf's Ex. 8.] Then a flux was 
applied to the large end of the rod by dipping it into 
molten tin or solder which served thereafter as a bond 
and caused the new babbitt metal to stick to the steel for- 
ging so as to become a part thereof. [Pltf's Ex. 8.] 

Then the nuts were removed from the bolts holding the 
cap to the shank and by means of a sharp blow the cap 
itself was removed and two steel separators were inserted 
between the cap and shank, one on each side. [Pltf's Ex. 
9.] These separators prevented the rod and cap from 
casting together when the molten babbitt thereafter was 
poured. A power driven socket wrench was used both 
for removing and tightening the nuts in connection with 



the insertion of the separators. [Pltf's Ex. 9.] 3 The 
oil holes in the large end of the forging were caulked with 
asbestos wicking, or other stoppers, to prevent the babbitt 
from plugging up the oil holes during the subsequent 
babbitt casting operation. [Pltf's Ex. 10.] 

The forgings then were taken to the centrifugal casting 
machines specially built by appellee for its own use. One 
operator could run two of these machines because it took 
the babbitt about 15 seconds to cast. [Pltf's Ex. 11.] 
Each machine had a revolving shaft on which was mounted 
a mold holder which was opened by means of a foot lever. 
[Pltf's Ex. 11.] The large end of the rod forging was 
placed between molds which cupped over each side thereof. 
The mold holder was encased in a pan-caked shaped con- 
tainer mounted perpendicularly to the floor. [Pltf's Ex. 
12.] The center of the door to the container had an 
aperture through which a small trough was affixed. The 
end of the trough led down into the outer face of the 
mold which was open. After the rod forging had been 
set in the mold holder, as stated above, the door of the 
container was closed and, by means of a foot lever, the 
shaft and mold started to revolve spinning the rod with 
the large bearing end of an axis. [Pltf's Ex. 12.] As 
the shaft, mold and rod revolved, an operator poured 
molten babbitt into the trough. The babbitt would run 
down into the large bearing end of the rod and the cent- 
rifugal force caused the molten babbitt to spread evenly 



3 Exhi1>it 9 states that in the case of rods for Model A Ford engines 
the cap is cast to the bearing end of the rod. This is obviously an error 
because the cap and shank must be severable in order to attach or detach 
the rod to the crank shaft. However, Exhibit 24 states that the babbitt 
is cast in Ford A connecting rods without the use of separator shims, but 
the babbitt is thereafter cut through the center so as to free the cap from 
the shank. 



—10— 

against the inside circular surface. [Pltf's Ex. 12.] Ap- 
pellee babbitted about 20% of the rod forgings by a hand- 
casting operation. [Pltf's Ex. 13.] A man would dip the 
rods in the acid and tin. Then the cap and shank were 
put separately into a fixture with the proper sized mold, 
between which mold and the cap on the one hand, and the 
mold and the shank on the other, an operator poured 
molten babbitt metal. [Pltf's Ex. 13.] The parts then 
were removed from the fixture and the surface babbitt 
protruding as a result of the hand operation was chipped 
off. [Pltf's Ex. 13.] 

Thereafter, a number of rods were placed in a basket 
which was lowered into a tank containing oakite where 
they were cleaned. [Pltf's Ex. 14.] All auxiliary nuts 
and bolts previously inserted together with steel separator 
shims then were removed. [Pltf's Ex. IS.] All ragged 
edges of the newly cast babbitt at the point where the 
separator shims had separated the cap from the shank were 
removed by holding the open face of the cap, or the shank, 
as the case may be, against a revolving sandpaper disk. 
[Pltf's Ex. 16.] The cap then was placed on the rod and 
either new nuts and bolts, or salvaged nuts and bolts 
which had been commingled, were inserted for the pur- 
pose of clamping the cap to the arm or shank and were 
tightened by a power driven socket wrench. [Pltf's Ex. 
17; R. 173,214.] 

In assembling the cap and shank, two new metal shims 
were inserted, one on each side, if it was the type of rod 
which required a shim. Only new shims were used by 
appellee. [R. 174, 199; Pltf's Ex. 49.] 

The operator then cleaned out the oil holes wherever 
they occurred in each of the units by using a drill press. 



—11— 

[Pltf's Ex. 18.] Because all oil holes were not of the 
same size, a second drill press with a larger drill also 
was used to perform the same operation, thus removing 
the necessity for frequently changing drills. [Pltf's Ex. 
19.] 

The rods, in groups, then were dipped in a tank con- 
taining a solution of rust preventative and thereafter 
hung on a rack to dry. [Pltf's Ex. 20.] After the dry- 
ing process, each unit was placed in a lathe where 
the newly cast babbitt was subjected to three operations. 
It was bored, faced and chamfered. The latter two 
operations finished the babbitt to standard width. [Pltf's 
Ex. 21.] If special undersizes were required the babbitt 
would be finished on a lathe to the desired undersize. 
[Pltf's Ex. 22.] 

Approximately 50% of the connecting rods have oil 
pockets in their babbitt bearings. Consequently, appellee 
subjected the babbitt portion of the rod to an operation 
on a hand milling machine whereby the necessary oil 
pockets, or grooves, were cut. [Pltf's Ex. 23.] 

All Model A Ford and six cylinder Chevrolet connecting 
rods required an oil groove on the face of the babbitt 
bearing which was cut in the shape of a figure eight by 
a hand operated oil groover. [Pltf's Ex. 28.] Certain 
Pontiac models required a continuous oil groove around 
the center of the babbit bearing. [Pltf's Ex. 29.] This 
groove was cut by what was known as a center oil 
groover operated by an electric motor. [Pltf's Ex. 29.] 

On rods for Model A Ford engines in which the babbitt 
was cast without the use of separator shims, it was neces- 
sary to cut the babbitt through the center in order to 
sever the cap from the shank. [Pltf's Ex. 24.] This 



—12— 

operation was performed with the aid of a slotting tool 
and rotating saw. The application of the slotting tool 
resulted in leaving a groove which would serve to facili- 
tate lubrication. [Pltf's Ex. 24.] After being grooved, 
the Model A rods were placed on a saw table where a 
rotating saw blade completely severed the babbitt flange 
and the cap and shank became separate units. [Pltf's 
Ex. 25.] 

The next operation was to install new bushings in the 
smaller end of the shank through the medium of a hand- 
operated arbor press. [Pltf's Ex. 26.] Model A Ford 
connecting rods were fitted with a very thin bushing which 
would become somewhat damaged when pressed in by the 
arbor press. [Pltf's Ex. 31.] This was corrected by 
placing the rods in a bench drill press and using a cham- 
fering tool. [Pltf's Ex. 31.] The Ford rods required 
a further operation of grooving or severing on the inside 
of the bronze bushing. Half of the rods were of the type 
that required the facing of the outer edge of the babbitt 
flange by means of a special tool placed in a drill press. 
[Pltf's Ex. 27.] 

Thereafter, all babbitt bearings excepting only those 
which were finished to special undersizes were finished to 
final size by an hydraulically operated broaching machine. 
The machine had a number of horizontal cutters, each 
removing about .0005 of an inch as the tool was forced 
through the babbitt bearing opening by hydraulic pressure. 
[Pltf's Ex. 30.] All bearings then were given a final 
inspection and the nuts holding the connecting rod caps 



—13— 

in place were loosened by a power operated socket wrench, 
to enable the operator to ascertain whether or not the 
threads of the bolts had been stripped. [Pltf's Ex. 32.] 
New nuts and bolts were replaced where necessary. 
[Pltf's Ex. 43.] 

Each rod then was put in a cardboard carton and placed 
in appellee's stock room. It had a stock room with stock 
in it in connection with each of its six plants. [R. 104, 
105, 242.] Appellee guaranteed its finished product 
against defective workmanship and material. [R. 179.] 
This is a characteristic guarantee in the industry. [R. 
179.] Each carton containing a Moroloy connecting rod 
had appellee's trade name and stock number at one end. 
The number conformed to appellee's printed price sheets 
and catalogs. [R. 144; Pltf's Exs. 44, 45, 47, 49.] The 
label on the end of the carton also contained a picture 
of a connecting rod and the words "Rebabbitted Connect- 
ing Rods, Centrifugally Cast, Accurately Machined" and 
"Moroloy bearing service". 

When appellee found it necessary to obtain a so-called 
"rebabbitted" rod from a local dealer, appellee had to pay 
the same price as it would for a "new" one [R. 179] ; 
that is, appellee paid its own retail list price (outright 
price) which was just about the same for the complete 
unit as the retail price of new rods taken out of stock 
which had come from an automobile factory. [R. 251.] 
If appellee found it necessary to obtain an entirely "new" 
rod from a local dealer, it sold it to its customers on the 
exchange basis for the same price as it would its own rods 



—14— 

which it had processed by combining used forgings with 
new materials. [R. 104-105.] 

The following occurred between appellee's chief wit- 
ness, J. Leslie Morris, and the court [R. 106] : 

The Court: The other ninety-five per cent [of ap- 
pellee's monthly sales] would consist of taking the 
used and damaged rod and processing it, as you 
have described, and delivering that identical rod so 
processed back to your customer? 

The Witness: No, sir; not the identical rod; a rod 
exactly like it. 

The Court: That is what I am talking about. 

The Witness: Yes. Not the identical rod, but a 
rod exactly like it. 

The witness further testified [R. 120] : 

* * * it would be physically impossible for us 
to tell who they came from, except we have the 
others waiting in the stockroom to go out. 

On the side margin of each page of the printed catalog 
which appellee distributed to the trade (wholesale supply 
houses) there was conspicuously displayed in large type 
on a red background the trade name for its product 
"Moroloy Connecting Rods". [Pltf's Ex. 49; R. 171.] 
On the second and third pages of appellee's 1933 catalog 
[Pltf's Ex. 49] the following statements, among others, 
appear: "By our exclusive manufacturing practice, de- 
veloped for 1933 conditions. . . . Jobbers Now Re- 
duce Inventories 50% on These Numbers * * * 



—15— 

Moroloy Connecting Rods 

Are Centrifugally Bonded and Automatically 

Machined to Duplicate Original Equipment 



Casting 



Moroloy Centrifugally Processed Rods meet en- 
gineering specifications of original car and motor 
manufacturers. 

This process deposits babbitt on the tinned surface 
under extreme centrifugal pressure, assuring an ab- 
solute bond between babbitt and steel, that is not ob- 
tainable by the old fashioned hand poured method. 

Centrifugally processed connecting rods are en- 
dorsed by the Society of Automotive Engineers and 
are used exclusively by the following manufacturers: 
[naming 25 automobile manufacturers]. 

"If It's Not Centrifugally Cast— It's Not A 
Factory Duplicate 

Automatic Pyrometers 

To regulate the temperature of rods, tin and bab- 
bitt, the Moroloy Centrifugal Process eliminates 
human element entirely. Heat control is obtained by 
approved automatic pyrometers. 

Machining and Finishing 

Moroloy machining and finishing is accomplished 
with the same engineering exactness, following closely 
the recommendations and usages of leading original 
manufacturers. 

Modern high compression engines demand close 
tolerances, both in bearing diameter and width. Of 
equal importance is proper length spacing. Moroloy 
precision tools are automatic in maintaining exact 



—16— 

length dimensions between center of piston pin and 
center of crankshaft. 

Moroloy processed rods are straightened, cleaned 
and serviced with new bolts, nuts, shims and piston 
pin bushings. Oil clearance allowed. No scraping nor 
reaming required. 

Electrical alignment is an exclusive Moroloy fea- 
ture. 

For Quick, Simple and Proper Installation, 
Insist on Moroloy 

The extra quality built into every rod means longer 
life, trouble free operation and Owner Satisfac- 
tion, the factors most important in building your 
business. 

Service 

Fifteen manufacturing plants, located at strategic 
points over the United States and Canada, render a 
coast to coast service, convenient to every jobbing 
center. Ample stocks at all branches assure same 
day shipment. Telephone and telegraphic orders re- 
ceive instant attention. 



For the period June 21, 1932, to August 1, 1935, the 
Commissioner of Internal Revenue assessed against ap- 
pellee $6,800.59 as manufacturer's excise tax under Sec- 
tion 606(c) of the Revenue Act of 1932, with respect to 
sales to jobbers of Moroloy connecting rods. [R. 45.] 
Appellee paid thereon to the Collector of Internal Revenue 
only the total sum of $1,500 in three installments of $500 
each, on September 1, 1937, April 22, 1938, and August 
13, 1938, respectively. [R. 44, 49-50, 55.] The $5,300.59 



—17— 

balance of the assessment remained unpaid and appellant 
set up a counterclaim therefor [R. 28-29] which the court 
denied. [R. 62.] Appellee filed separate claims for the 
refund of each of the three $500 payments [R. 45-49, 
50-54, 55-58] on the grounds that it "is engaged in the 
business of rebabbitting worn automobile connecting rods" 
and that its "process is only a repair" [R. 46], and that 
it is not a manufacturer. The claims were rejected by the 
Commissioner of Internal Revenue [R. 49, 54, 58, 233- 
234] and this suit was timely commenced. 

Statement of Points to Be Urged. 

The main point upon which appellant relies [R. 255] 
is that the District Court erred in determining that the 
sales of connecting rods by appellee, during the taxable 
period involved herein, were not sales of automobile parts 
or accessories by a manufacturer or producer thereof with- 
in the purview of Section 606(c) of the Revenue Act of 
1932. Included as part and parcel of the reasons for 
the making of this error are the following more specific 
points : 

(a) The court erred in finding (Fdg. Ill) that all of 
the connecting rods in respect of the sale of which the 
tax in question was assessed were manufactured by per- 
sons, firms, or corporations other than appellee and, be- 
fore their acquisition by appellee, had been used as operat- 
ing parts for automobile motors, for the reason that the 
finding is clearly erroneous and unsupported by the evi- 
dence. 



—18— 

(b) The court erred in finding (Fdg. IV) that none of 
the articles sold by appellee, on which the tax in suit 
was assessed and paid, were manufactured or produced 
by appellee, and that appellee was engaged in the business 
of repairing and rebabbitting worn and damaged auto- 
mobile connecting rods, for the reason that this alleged 
finding, if it is such is clearly erroneous and without sup- 
port in the evidence. Although purporting to be a finding 
of fact, appellant claims it constitutes a conclusion of law 
or, at best, involves a mixed question of fact and law. 

(c) The court erred in making a finding (Fdg. IV) 
that appellee's process "did not change the identity of the 
parts in any manner", for the reason that such finding, if 
material, is clearly erroneous and without support in the 
evidence. 

(d) The court erred in failing to find that the sales 
by appellee were of automobile parts or accessories. 

Summary of Argument. 

The transactions involved constituted sales of automo- 
bile parts within the meaning of the statute, which is a 
revenue measure exclusively and is to be construed ac- 
cordingly. The automobile parts involved were fashioned 
by combining new materials with salvaged materials and 
subjecting them to machine and hand operations which 
clearly constituted manufacturing and/or production pro- 
cesses. The completed articles were stocked, cartoned, 
labelled, numbered, catalogued and marketed by appellee 
under its own copyrighted trade name "Moroloy" and were 



—19— 

sold chiefly to jobbers for resale to garage men and me- 
chanics for use in repairing automobile motors for indi- 
vidual car owners. From the standpoint of production 
and distribution in the trade, appellee performed the func- 
tion of a manufacturer or producer of automobile con- 
necting rods in the true sense, and not the repairing of 
used or worn connecting rods for owners or users. 

The better reasoned and recent decisions, including the 
decision of this Court in the Armature Exchange case, 4 
support the view that appellee is a manufacturer or pro- 
ducer of automobile parts within the meaning of the tax- 
ing statute. Likewise, under the applicable Treasury 
Regulations which have been in effect for a long period of 
time, during which the statute has been reenacted many 
times without material change, appellee is taxable as the 
producer or manufacturer of the articles it sold. 

The judgment, ultimate findings and conclusions of the 
court below are not supported by the evidence, are clearly 
erroneous and should be reversed with a direction that 
judgment be entered in favor of appellant for the balance 
of the unpaid assessment, only $1,500 of which was paid 
and forms the basis for this suit. 



^United States v. Armature Exchange, 116 F. (2d) 969, certiorari denied 
May 5, 1941. 



—20— 

ARGUMENT. 

I. 

The Transactions Involved Constituted Sales of Auto- 
mobile Parts Within the Meaning of the Statute, 
Which Is a Revenue Measure Exclusively, and Is 
to Be Construed Accordingly. 

By Section 606(c) of the Revenue Act of 1932 [Ap- 
pendix, infra], an excise tax equivalent to 2% of the sales 
price is imposed with respect to automobile parts or ac- 
cessories on the manufacturer, producer, or importer 
thereof. No imports are involved here. 

Clearly, the Moroloy Connecting Rods involved are au- 
tomobile parts or accessories. No argument seriously can 
be advanced to the contrary. It is equally clear that the 
Moroloy rods were sold by appellee and were not the 
subject matter of contracts of repair for others. No con- 
tention was made by appellee to the effect that the trans- 
actions did not involve sales of connecting rods. The com- 
plaint affirmatively alleges [R. 3] that the taxes sued for 
were assessed and imposed in respect of sales by appellee, 
and the court expressly found that the taxes were assessed 
and imposed in respect of sales of connecting rods by ap- 
pellee. [R. 39.] The court also found [R. 59] that the 
tax involved was not included by appellee in the sale price 
of the connecting rods. 

Thus, under the pleadings, undisputed evidence, and 
findings, there can be no doubt that the transactions which 
were taxed constituted sales of automobile parts as dis- 
tinguished from transactions involving repair jobs upon 



—21— 

articles belonging to others who retained the title thereto 
and who received the return thereof after the furnishing 
of materials and the performance of labor thereupon by 
appellee. 

No question was raised by appellee in its claims for 
refund or pleadings concerning the propriety of whatever 
price basis was used in the computation of the total tax 
assessment of $6,800.59 of which only $1,500 was paid 
on account. The evidence does not disclose whether the 
outright price, consisting of part cash plus the amount of 
allowance made for the used article taken in trade as part 
payment, or merely the cash portion of the sales price 
which appellee contends represented the cost of the alleged 
"rebabbitting" or "repairing" was used in computing the 
tax in dispute. 

It follows that the inquiry resolves itself solely into the 
question of whether appellee's sales of the Moroloy con- 
necting rods for automobiles were taxable to it as the 
manufacturer or producer thereof within the meaning of 
the Act. The court reached its decision against the Gov- 
ernment by pyramiding one erroneous view upon another; 
first, it assumed and concluded that the characterization 
"rebabbitting" was truly descriptive of the processes of 
appellee; second, that the "rebabbitting" process by ap- 
pellee constituted a process which was one of repair only 
and, third, having reached the latter conclusion, it neces- 
sarily followed (irrespective of appellee's position in the 
trade from the standpoint of production and distribution) 
that it could not be a manufacturer or producer. In 



—22— 

reaching its decision, the District Court obviously was 
influenced by the fact that competitors of appellee engaged 
in similar business had been held by some of the District 
Courts, in similar fact situations, not to be manufacturers. 
In this connection, the trial court, in its memorandum 
opinion, stated [R. 34-35] : 

For the sake of uniformity, if for no other reason, 
taxpayers identically situated and doing precisely the 
same thing in relation to tax laws should be treated 
alike. Our inquiries and investigations have failed to 
disclose that the government has taken appeal in the 
cases referred to, and we are therefore justified in 
assuming that refunds have been made to the respec- 
tive taxpayers situated as is the plaintiff taxpayer in 
this action. 

We are not unmindful of the decision of the 
Seventh Circuit Court of Appeals in Clazvson & Beds, 
Inc., v. Harrison, Collector, 108 F. 2d 991, reaching 
a contrary conclusion as to the meaning of the terms 
"manufacturer" and "producer" as applied to re- 
babbitting activities similar to those shown by the 
record before us. * * * 

Inasmuch as our Circuit Court of Appeals has not 
considered or decided the question under consideration 
in this action, we are justified in formulating and 
reaching our own conclusions under the record before 
us and in the light of other identical situations con- 
sidered and determined uniformly by the federal 
courts of the Ninth Circuit. (Italics supplied.) 

We submit that the decision below is clearly erroneous. 
However, it is apparent from the foregoing excerpts that 
the District Court followed the decision in a similar type 
of case in the Northern District of California chiefly for 



—23— 

the sake of uniformity in the absence of a decision by 
this Court. It did not have the benefit of this Court's 
opinion rendered eight months later in United States v. 
Armature Exchange, 116 F. (2d) 969, certiorari denied 
May 5, 1941. Had the Armature Exchange case been 
decided by this Court prior to the decision below, it is 
safe to assume that the District Court would have reached 
a different conclusion, particularly in view of its expres- 
sion that the record here presents "rebabbitting activities 
similar" to those in the case of Clawson & Bals v. Harri- 
son, 108 F. (2d) 991 (C. C. A. 7th), certiorari denied, 
309 U. S. 685. The latter case was cited and followed by 
this Court in the Armature Exchange case. 

We make the same contention here as was made before 
this Court in the Armature Exchange case, supra, and 
in our brief in United States of America, Appellant v. 
Moroloy Bearing Service of Oakland, Ltd., Appellee, No. 
9786, this Court, and in Clazvson & Bals v. Harrison, 
supra, involving sales of alleged "rebabbitted" connecting 
rods, namely, that appellee was engaged in the manufac- 
ture and/or production and sale of connecting rods and 
not in the business of repairing used, discarded and worn- 
out connecting rods; that it had factories, made connect- 
ing rods, and sold them — it did not enter into contracts 
for the performance of labor and supplying of material 
with respect to articles owned by others who retained 
ownership and sought merely to prolong the life thereof 
by having the articles repaired for their own use; that 
in connection with the production of its article, appellee 
purchased used and worn-out connecting rods which had 
been discarded and relegated to the junk heap, i. e., it 
used in part scrap having a value essentially as raw 
material; that it stripped and dismantled the used and dis- 



—24— 

carded connecting rods and salvaged and prepared the 
usable shanks and caps for its manufacturing and pro- 
duction processes; that by machine and hand operations, 
cleaning, cutting, grinding, grooving, polishing, manipu- 
lating, assembling, heating, chemically treating, adding 
and combining with the prepared salvaged parts new ma- 
terials and industry, it processed and fashioned such ma- 
terials into articles of merchandise which it stocked and 
marketed under its special copyrighted trade name 
"Moroloy ,? ; that all of such articles were the equivalent 
of connecting rods processed, fashioned and fabricated 
entirely from materials which previously had not been 
utilized in similar manufactured articles. In other words, 
we contend that all of the essential elements of manufac- 
ture and/or production exist for the purpose of the tax- 
ing statute. 

The statute is very broad and comprehensive and in- 
dicates a Congressional intent to bring within its reach all 
persons placing automobile parts and accessories on the 
market for sale in the United States. 

An example of the broad scope of the taxing provi- 
sions, as intended by Congress, is furnished by Section 
623 of the Revenue Act of 1932, which provides: 

Sec. 623. Sales by Others Than Manufacturer, 
Producer, or Importer. 

In case any person acquires from the manufacturer, 
producer, or importer of an article, by operation of 
law or as a result of any transaction not taxable 
under this title, the right to sell such article, the 
sale of such article by such person shall be taxable 
under this title as if made by the manufacturer, 
producer, or importer, and such person shall be liable 
for the tax. (Italics supplied.) 



—25— 

The applicable Treasury Regulations (Regulations 46) 
broadly define the terms used in the Act. They provide 
in part as follows: 

Art. 4. Who is a manufacturer or producer. — 
As used in the Act, the term "producer" includes a 
person who produces a taxable article by processing, 
manipulating, or changing the form of an article, or 
produces a taxable article by combining or assembling 
two or more articles. 

Under certain circumstances, as where a person 
manufactures or produces a taxable article for a per- 
son who furnishes materials and retains title thereto, 
the person for whom the taxable article is manufac- 
tured or produced, and not the person who actually 
manufactures or produces it, will be considered the 
manufacturer. (Italics supplied.) 

Art. 41. Definition of parts or accessories. — 
The term "parts or accessories" for an automobile 
truck or other automobile chassis or body, or motor- 
cycle, includes (a) any article the primary use of 
which is to improve, repair, replace, or serve as a 
component part of such vehicle or article * * *. 

Section 1111(b) of the Revenue Act of 1932 provides 
that the term "includes", when used in a definition in the 
Act, shall not be deemed to exclude other things otherwise 
within the meaning of the term defined, and Article 2 
of Treasury Regulations 46 provides that the "terms used 
in these regulations have the meaning assigned to them by 
section 1111". 

Thus, it was obvious that Congress intended to impose 
the tax upon the sale of each and every automobile part 
or accessory produced and sold to wholesalers, jobbers 
and distributors, as well as sales by the producer or manu- 



—26— 

facturer directly to the retailer or ultimate consumer. 
However, the decision below, if allowed to stand, would 
nullify such Congressional intent by permitting the pro- 
duction of automobile parts from a combination of new 
materials with salvaged parts of worn-out articles having 
no other value than that of junk, and the sale thereof 
in competition with similar automobile parts produced en- 
tirely from new materials, without being subjected to tax 
upon sale to the wholesale trade. 

Our contention is consistent with the definition of a 
manufacturer or producer as used in the Treasury Regu- 
lations which have been in effect for a long period of 
years, during which time the statute has several times 
been reenacted without change, so far as here material. 
Article 4, supra, of Treasury Regulations 46, provides 
that a producer includes a person who "produces a taxa- 
ble article by combining or assembling two or more ar- 
ticles". Although this definition seemed amply clear, it 
has been made even clearer by Section 316.4 of the 1940 
Edition of Treasury Regulations 46 which were promul- 
gated under Section 3450 of the Internal Revenue Code 
with respect to excise tax provisions covering automobile 
parts, tires, tubes, and other taxable articles. (See Sec- 
tion 3400, et seq.. Internal Revenue Code.) Section 316.4, 
supra, provides: 

Who is a manufacturer. — The term "manufacturer" 
includes a person who produces a taxable article from 
scrap, salvage, or junk material, as well as from new 
or raw material, (1) by processing, manipulating, or 
changing the form of an article, or (2) by combining 
or assembling two or more articles. 

The decisions of this Court in the Armature Exchange 
case, supra, and of the Seventh Circuit Court of Appeals 



—27— 

in the Claw son & Bals case, supra, are squarely in point 
and accord with the views and reasoning hereinabove ex- 
pressed. 

It should be remembered that the excise tax is a rev- 
enue measure exclusively. Thus, the facts must be con- 
sidered in the light of such statutory object and purpose. 

The tax is on each transaction at the rate of 2% of the 
manufacturer's or producer's sale price of the article sold. 
It is not imposed upon repair jobs 5 involving mere con- 
tracts for labor and material with respect to articles owned 
and used by another. Yet, despite the undeniable fact 
that appellee realized its business profit from the sale 
of its product, the court below erroneously concluded [R. 
39-40] that appellee was "engaged in the business of re- 
pairing and rebabbitting worn and damaged automobile 
connecting rods". An effective answer to this conclusion 
or finding was furnished, we believe, by the Seventh 
Circuit Court of Appeals in Clawson & Bals v. Harrison, 
108 F. (2d) 991, 994, wherein it said: 

The fact that the taxpayer could perform for the 
owner of used connecting rods all of the mechanical 
operations which it does perform under the facts of 
this case, and still properly be classified as a repairer, 
does not require a holding that the taxpayer is a re- 
pairer when it purchases discarded rods to be used as 
materials for combination with other materials of 
the taxpayer, and by means of mechanical operations 
prepares what are, for all practical purposes, new 
connecting rods for sale in the trade. 



5 As a matter of administrative policy, the revenue officials eliminate 
from their excise tax computations all repair job transactions, if any, which 
may be found, or which the taxpayer may have overlooked. 



—28— 

Because of the hundreds of thousands of transactions 
occurring daily throughout the country, which are subject 
to the excise tax provisions, the method of ascertainment 
of such taxes must be possible of accomplishment without 
being fettered by technical refinements which tend to defeat 
the purpose of the statute as a means of raising revenue. 
The following quotation from Raybestos-Manhattan Co. 
v. United States, 296 U. S. 60, 63, is apropos here: 

The reach of a taxing act whose purpose is as obvi- 
ous as the present is not to be restricted by technical 
refinements. 

See, also: 

Founders General Co. v. Hoey, 300 U. S. 268, to 
the same effect. 

In Tyler v. United States, 281 U. S. 497, the Court 
stated (p. 503): 

The power of taxation is a fundamental and imperious 
necessity of all government, not to be restricted by 
mere legal fiction * * *. 

Taxation, as it many times has been said, is emi- 
nently practical * * *. 

In the Tyler case the Court held that the Congressional 
intent to tax decedent's interest at date of death in a 
tenancy by the entireties could not be restricted by the 
technical incidents of such common law tenancy. Like- 
wise, the terms "manufacturer" or "producer", used in 
the statute, should not be treated as words of art, but 
rather construed so as to effectuate the evident broad intent 



—29— 

of Congress with respect to the taxation of automobile 
parts. In Turner v. Quincy Market Cold Storage & 
Warehouse Co., 225 Fed. 41, 43 (C. C. A. 1st), it was 
held that the term manufacture "is a very broad word, 
which it is not safe to limit in a general way". See 
Hughes & Co. v. City of Lexington, 211 Ky. 596, 277 
S. W. 981, 982, wherein the court, in holding that appel- 
lant was engaged in manufacturing, stated: 

That the definition of the term is a question of 
law and for the courts is plain, but the courts are 
practically agreed that it is incapable of exact defini- 
tion, and that there is no hard and fast rule which 
can be applied, but that each case must turn upon 
its own facts, having regard for the sense in which 
the term is vised and the purpose to be accomplished. 
[Citing cases.] (Italics supplied.) 

In Carbon Steel Co. v. Lewellyn, 251 U. S. 501, it was 
held that the rule of strict construction will not be pressed 
so far as to reduce the taxing statute to a practical 
nullity by permitting easy evasion. The court stated (p. 
505): 

It is, of course, the contention of petitioner that this 
was furnishing, not manufacturing, and that the 
literal meaning of words can be insisted on in resist- 
ance to a taxing statute. We recognize the rule of 
construction but it cannot be carried to reduce the 
statute to empty declarations. And, as we have al- 
ready said, petitioner's contention would so reduce it. 



—30— 

It may be added that the proper guide for the interpreta- 
tion and construction of Section 606(c) — as for all inter- 
nal revenue laws — was furnished by the Supreme Court in 
Stone v. White, 301 U. S. 532, 537: 

It is in the public interest that no one should be per- 
mitted to avoid his just share of the tax burden ex- 
cept by positive command of law, which is lacking 
here. 

It follows from what has been said that the first ques- 
tion for determination in a case of this kind is whether 
there has been a sale of the articles under consideration, 
for if there has been no sale the statute does not apply. 
If the articles have been sold, the only remaining inquiry 
is whether the seller was also the manufacturer, producer, 
or importer thereof, within the meaning of the applicable 
statute and regulations. In passing upon the latter ques- 
tion, it should be borne in mind that the idea of one re- 
pairing an article for another is opposed to the idea that 
the repairer may be simultaneously the seller of the article 
itself upon completion of his contract for the performance 
of labor and supplying of materials. Yet, conversely, the 
appellee contends in substance that although it was the 
seller of the articles in question, it should be held to be 
only the repairer thereof. There is no question but that 
the "moroloy" Connecting Rods were sold by appellee 
for use by ultimate vendees in repairing automobile en- 
gines. 



—31— 

II. 

Appellee Is the Manufacturer or Producer of the 
Moroloy Connecting Rods Sold by it and Not 
Merely a Repairer of Second-hand, Damaged and 
Worn Out Connecting Rods. 

Appellee was incorporated for the defined purpose of 
operating a ''business for the manufacture, sale and dis- 
tribution of automotive * * * products" and to "oper- 
ate branch plants" therefor. [R. 37.] It actually engaged 
in the business of selling automobile parts to automotive 
jobbers throughout the United States and, through an 
affiliate, in Canada. It operated six plants or factories, 
had considerable machinery and equipment for its opera- 
tions, produced an estimated amount of more than 240,- 
000 connecting rods each year, maintained a stock for sale 
of connecting rods for nearly all makes of automobiles, 
and cartoned or boxed each article in a container marked 
with appellee's own trade name and stock number. In 
its printed trade catalogs, it unmistakably represented its 
function and processes as those of a manufacturer. 

The taxing statute does not discriminate between auto- 
mobile parts produced entirely from new materials and 
those produced by combining new materials with usable 
materials salvaged from discarded articles, scrap or junk 
purchased and dismantled for such purpose. Neither do 
the definitions of the words manufacturer, producer, manu- 
facture, or produce, require that a manufactured article 
shall consist entirely of new or virgin raw materials. In 
fact, it has been held that a manufactured article need 



—32— 

not be made wholly or even in part of raw material. 
(The King v. Biltrite Tire Co., 1937 Canada Law Rep. 
(Ex. C. R.) 1, 14.) 

In the Armature Exchange case, supra, this Court 
stated (p. 971): 

We cannot find any justification for reading into 
the statute involved here, as taxpayer would have us 
do, the qualification that the articles "manufactured 
or produced" must have been so manufactured or 

produced entirely from new or virgin raw materials. 
* * * 

The Government contends, and we think correctly, 
that the discarded armatures purchased by the tax- 
payer, having lost their function as a useful article 
as well as their commercial value as such, when ac- 
quired for use in the manufacturing and production 
of an article of commerce, bear the same relation 
to the completed armature as the purchase of un- 
used materials would bear to the completed article. 
See Cadwalader v. Jessup & Moore Paper Co., 149 
U. S. 350 * * *. The article resulting from the 
use of the discarded core with new materials, and 
through the employment of skill, labor and machinery, 
is, as it seems to us, a manufactured and produced 
article of commerce. Such an article produced in 
quantities under a trade name and placed in stock 
for future sale must be classified as a manufactured 
or produced article. It is our opinion and we hold 
that these operations constituted "manufacture or 
production" within the meaning of the statute in- 
volved. See opinion in Clawson & Bah, Inc. v. Har- 
rison, 7 Cir., 108 Fed. (2d) 991. 



—33— 

The use of the term "rebabbitted" is without material 
significance, for it appears to have been acquired in the 
early days of the automotive industry and obviously was 
borrowed from the garage man or mechanic who orig- 
inally used to "rebabbitt" the connecting rods of an owner 
who brought in his car for repairs. [R. 85.] Appellee's 
function, and that of its competitors, has not only sup- 
planted the former limited undertaking of the individual 
mechanic but, by a process of industrial evolution, both 
mechanically and economically, has become an integral 
part of the automotive replacement parts manufacturing 
industry, so much so that today all the mechanic need 
do is purchase a new set of connecting rods at reasonable 
cost from the nearest parts jobber and install them, in- 
stead of attempting to repair the babbitt bearings of 
his customer's connecting rods. [R. 85.] 

Appellee obviously considered itself the producer of the 
connecting rods it stocked and sold, otherwise it is not 
likely that it would have adopted the trade name under 
which it advertised and catalogued its product. The 
rods were placed by appellee in marketable or merchant- 
able form with the usual standard guarantee for such 
articles. 

The court below, as stated in its opinion, considered 
that the socalled "rebabbitting" activities of appellee, as 
shown by the record before us, were similar to those con- 
sidered by the Seventh Circuit Court of Appeals in the 
Clawson & Bals case, supra. Appellee's chief witness 
testified [R. 196- 197 J that appellee handled its customers 



—34— 

in the same way as did most "rebabbitters", including 
the Federal Mogul Corporation, which is one of the larg- 
est in the United States. 

In view of the information contained in the Federal 
Mogul 6 and Clawson & Bals findings and decisions, this 
Court will take notice of the fact that the loosely used 
trade characterization "rebabbitted" does not furnish an 
accurate or complete description of the processes under- 
taken by persons who sell articles of the disputed type 
to wholesale automotive jobbers. Consequently, and in 
view also of the evidence in this case, we submit that the 
court below erroneously held [R. 39] that the connecting 
rods (which were sold by appellee) were manufactured by 
others. In view of the processes disclosed by the evi- 
dence, it is not possible correctly to so find. The court 
might have found that the caps and shanks and some of 
the nuts and bolts used in appellee's processes originally 
had been made by others but such a finding would not 
detract from our contention herein. 

Likewise, the court erred in finding that the used con- 
necting rods sold by appellee formerly had been used 
as operating parts for automobile motors. Appellee did 
not sell formerly used connecting rods but sold a product 
which it assembled from materials salvaged from formerly 
used connecting rods and other materials. As disclosed 
by the evidence here and by the finding in the Federal 



^Federal Mogul Corp. v. Smith (S. D. Ind.), decided February 23, 1940, 
not officially reported but published in 1940 Prentice-Hall, Vol. 4, par. 
62,510. 



—35— 

Mogul and Clawson & Bals cases, supra, the babbitting 
process is not the chief operation in the production of con- 
necting rods. This is particularly true where the rods 
are equipped with bronze bushings. In such cases the 
bronze bearing and babbitt bearing, as stated, are equally 
important and, in addition, there is the requirement of 
shims and new nuts and bolts so that the only used 
materials involved in such a rod may consist merely 
of formerly used cap and shank. 

Although appellee's witness Morris testified that the 
same cap was put back on the same shank, it appears 
from the Federal Mogul findings that it is not necessary 
to do this in all cases. This is especially true in the 
case of Ford rods. Thus, it frequently may occur that 
upon completion of a rod it may contain a cap from one 
formerly used rod, a shank from another used rod, and 
the balance thereof entirely of new materials. 

Appellee's own evidence refutes the idea that it merely 
"rebabbitted" connecting rods for others. In its printed 
catalog (Pltf's. Ex. 49), it represented that Moroloy 
processed rods contained "new bolts, nuts, shims and pis- 
ton pin bushings". Consequently, the Moroloy rods which 
were sold by appellee were not rods originally manufac- 
tured by others than appellee, or rods which previously 
had been used as operating parts of automobile motors, 
as found by the court. As stated, these findings clearly 
are erroneous. 

We believe that the foregoing discussion aptly demon- 
strates that appellee did not sell what were in fact "re- 



—36— 

babbitted" connecting rods but sold to the trade connect- 
ing rods which it fashioned, assembled and processed from 
commingled scrap and new materials. 

The evidence definitely established that appellee was the 
producer of the connecting rods it sold because the es- 
sential elements of manufacture or production were shown 
to exist. It acquired worn-out connecting rods which it 
dismantled and from which it salvaged the usable parts 
and then, by machine and hand operations, together with 
the addition of new materials, it assembled and fashioned 
an automobile part which it marketed under its own trade 
name in competition with similar products manufactured 
by the Federal Mogul Corporation, Clawson & Bals, 
Inc., automobile manufacturers and others. It made a 
serviceable and salable product from scrap and raw mate- 
rials. Whether appellee itself manufactured the shank 
and cap used in producing Moroloy connecting rods would 
appear to be immaterial. The essential fact is that appel- 
lee combined the salvaged individually useless items with 
new materials and, through the employment of skill, labor, 
and machinery, produced a valuable item of commerce 
which it sold to the trade. Thus, from the standpoint 
of production and distribution in the trade, appellee per- 
formed the function of a producer or manufacturer 
rather than a repairer. 



—37— 

III. 

The Applicable Decisions Support the Contention 
That Appellee Is a Manufacturer or Producer of 
Automobile Parts Within the Purview of the Tax- 
ing Statute. 

The Government's position that persons engaged in 
selling automobile parts processed by them from a com- 
bination of usable parts (salvaged and prepared from dis- 
mantled formerly used parts) and new materials are pro- 
ducers and/or manufacturers of automobile parts and ac- 
cessories within the meaning of the taxing statute is sup- 
ported by the following decisions: 

United States v. Armature Exchange, decided by this 
Court, involving automobile generator armatures pro- 
cessed from a combination of new and used materials. 
The taxpayer sold its armatures in boxes bearing the 
legend "Annex Rebuilt Armatures". 116 F. (2d) 969, 
970, certiorari denied May 5, 1941. 

Clawson & Bals v. Harrison, 108 F. (2d) 991 (C. C. 
A. 7th), certiorari denied, 309 U. S. 685, involving al- 
leged "rebabbitted" connecting rods made by taxpayer 
from a combination of used caps, shanks, nuts and bolts 
and new materials. 

Edelman & Co. v. Harrison (N. D. 111.), decided April 
7, 1939, not officially reported but published in 1939 Pren- 
tice-Hall, Vol. 1, par. 5.379, involving so-called "re- 
wound" armatures and "rebuilt" generators for automo- 
biles made by taxpayer from a combination of new and 
used materials. 



—38— 

Federal-Mogul Corp. v. Smith (S. D. Ind.), decided 
February 23, 1940, not officially reported but published 
in 1940 Prentice-Hall, Vol. 4, par. 62,510, involving auto- 
mobile connecting rods made by taxpayer from a com- 
bination of new and used materials in a manner similar 
to that involved in the Clawson & Bals case, supra, and 
the instant case. 

Moore Bros., Inc. v. United States (N. D. Tex.), de- 
cided May 14, 1940, not officially reported but published 
in 1940 Prentice-Hall, Vol. 4, par. 62,676, involving so- 
called "rebuilt" automobile armatures. 

The case of Motor Mart v. United States (N. D. Tex.), 
(involving generators and armatures) was decided for 
the Government on May 14, 1940, without opinion (Civil 
Action #239). 

Biltrite Tire Co. v. The King, 1937 Canada Law Rep. 
364, arising under the Canadian War Revenue Act of 
1927, involving language similar to that used in Section 
606(c) of the United States Revenue Act of 1932, and 
involving so-called "retreaded" automobile tires. 

The King v. Biltrite Tire Co., 1937 Canada Law Rep. 
1, being the immediately preceding case in the Exchequer 
Court of Canada, at first instance and in the exercise of 
its appellate jurisdiction. 

The King v. Boidtbee, Ltd. [1938], 3 Dominion Law 
Rep. 664, involving so-called "retreaded" automobile tires 
made by taxpayer on a small scale. Taxpayer also did 
considerable retreading of tires for customers to whom 
the tires were returned. The latter transactions were 
not sought to be taxed because they did not involve a 
sale of the completed article but merely a contract for the 
furnishing of materials and labor. 



—39— 

In Foss-Hughcs Co. v. Lederer (E. D. Pa.), 287 Fed. 
150, an assembler of truck parts was held to be taxable 
as a producer of trucks within the meaning of the excise 
tax law of October 3, 1917. The law provided for a tax 
on automobile trucks sold by the manufacturer, producer, 
or importer. The taxpayer was a dealer who neither 
imported nor manufactured but purchased the chassis from 
the manufacturer and then employed a contractor to add 
the body. He was held liable as a producer of trucks 
in these circumstances. In this case, the court, appar- 
ently recognized that the term "producer" is broader than 
the term "manufacturer". 

In Klepper v. Carter, 286 Fed. 370, 371, this Court cited 
and relied upon the Foss-Hnghes case, supra. In the 
Klepper case this Court held a retail salesman liable under 
the 1919 version of the 1932 excise tax law as a manu- 
facturer or producer of automobile trucks. The salesman 
merely purchased automobile truck bodies from one manu- 
facturer and chasses from another, and assembled the two 
parts. The Court directed attention to the fact that Ar- 
ticle 7 of the December, 1920, revision of the Regulations 
defined the word "manufacturer" as generally a person 
who (1) actually makes a taxable article; or (2) by 
changes in the form of an article produces a taxable ar- 
ticle; or (3) by the combination of two or more articles 
produces a taxable article. This Court said that the re- 
tail salesman, Klepper, saved the purchaser all the trouble 
of assembling the chassis and body, and made it his 
business to retail the product of his purchases as an auto- 
mobile truck that he thus produced or manufactured the 
truck. 

In Cadwalader v. Jessup & Moore Paper Co., 149 U. S. 
350, the recovery of customs duties was sought on the 



—40— 

ground that old india-rubber shoes imported by Jessup and 
Moore were valuable only as a substitute for crude rub- 
ber and, therefore, were exempt from duty under the free 
classification "India-rubber, crude and milk of". A duty 
of twenty-five per cent ad valorem had been collected on 
the old shoes as (p. 351) "articles composed of india- 
rubber, not specially enumerated or provided for in this 
act". Another section of the act provided for a duty 
on non-enumerated articles equal to that imposed upon 
the enumerated articles they most nearly resembled, and 
where they resembled two or more enumerated articles, 
that taking the highest duty was to be used as the basis. 
The Supreme Court, in holding the articles to be non- 
dutiable, held that the old shoes had lost their commer- 
cial value as such articles, and substantially were merely 
the material called "crude rubber". Thus, the principle 
of the Cadwalader case supports the contention that a 
taxpayer engaged in the production of automobile parts 
in the manner herein disclosed is a manufacturer and 
producer since, because of the loss of their commercial 
value, the used connecting rods are essentially raw ma- 
terial. 

Although we contend that the patent infringement de- 
cisions and some of the tariff cases are not in point, the 
two following cases are of interest: 

In Cotton Tie Co. v. Simmons, 106 U. S. 89, the 
Court held that one who bought used cotton-bale ties, 
consisting of a metal buckle and a band, which were 
patented, and who rolled and straightened the pieces of the 
ties, riveted the ends together, and cut them into proper 
lengths and sold them with the buckles to be used again 
as ties, had "reconstructed" and not merely "repaired" 
the bale-ties in the patent law sense and was guilty of 



-41— 

infringement even though no new material parts were 
added. 

In Davis Electrical Works v. Edison Elec. Light Co., 
60 Fed. 276 (CCA. 1st), the court held that the making 
of a hole in the bulb of an Edison incandescent lamp, 
in which the filament has been destroyed by use, and the 
putting in of a new filament and closing the hole by 
fusing a piece of glass over it and then exhausting the 
air, constituted "reconstruction" and not merely repairing 
as matter of patent law. 

There can be no dispute but that when appellee ac- 
quired the used and worn-out automobile parts, they were 
classifiable as scrap and junk. The following definitions 
and authorities concerning scrap and junk seem clearly 
applicable : 

56 Corpus Juris., 884-885, states: 

Scrap. (Sec. 1)A. As Noun. The word origin- 
ally meant what was scraped off. It has come to 
have an extended meaning and includes anything 
that is thrown aside. The word has reference to 
the antecedent history of the article and not to the 
use that a new owner might make of it. 

jj£*#:j£3|cs|ej|c>|<* 

(Sec. 2)B. As Adjective. On the form of scraps; 
also valuable only as raw material. 

In Ward, Ltd. v. Midland R. Co., 33 T. L. R. 4, 6 
(Eng.), "scrap" was defined as follows: 

An article was scrap if it was no longer useful to its 
owner; the word had reference to the antecedent his- 
tory of the article and not to the use that a new 
owner might make of it. 



—42— 

The word "junk" has been held to include discarded 
parts of machinery. City of Duhtth v. Bloom, 55 Minn. 
97, 100, 21 L. R. A. 689, 690. Discarded automobile 
fixtures were held to be within the definition of "junk" 
in Melnick v. City of Atlanta, 147 Ga. 525, 94 S. E. 
1015. In City of Chicago v. Reins chreiber, 121 111. App. 
114, 120, the court defined the word "junk" as (pp. 118- 
119) — 

worn out or discarded material in general, that still 
may be turned to some use, especially old rope, chain, 
iron, copper, parts of machinery, bottles, etc., gathered 
or bought up by persons called "junk dealers" * * *. 

In the instant case, the used parts were nothing more 
than "junk" when received by appellee. The principal 
purpose of its business was to produce and sell automo- 
bile connecting rods for numerous makes of automobiles 
from a combination of new or prepared raw materials 
and essentially raw material which appellee prepared. The 
acquisition of second-hand material was merely incidental 
to its production and/or manufacturing business. 

In City of Louisville v. Zinmeister & Sons, 188 Ky. 
570, 222 S. W. 958, the court stated (pp. 575-576) : 

Courts here experienced much difficulty in determin- 
ing what is a manufacturing establishment and what 
is included in the term "manufacture." There is 
no hard and fast rule by which to determine whether 
a given establishment is a "manufactory," but all the 
facts and circumstances must be taken into consider- 
ation in determining whether the establishment is or 
is not to be so reckoned. Whether it is such an estab- 
lishment does not depend upon the size of the plant, 
the number of men employed, the nature of the busi- 
ness or the article to be manufactured, but upon all 
these together and upon the result accomplished. 



—43— 

If raw material is converted at a factory or plant 
into a finished product, complete and ready for the 
final use for which it is intended, or so completed 
as that in the ordinary course of business of the 
concern it is ready to be put upon the open market 
for sale to any person wishing to buy it, the plant 
which turns it out is a manufacturing establishment 
within the meaning of the statute * * *. (Italics 
supplied.) 

Likewise, in the instant case it is important to consider 
all the surrounding facts and circumstances and not limit 
consideration of the question involved to any single 
factor, or to the narrow confines of an antiquated literal 
interpretation of the word "manufacture" as understood 
prior to the advent of modern machinery and industrial 
methods of salvaging for manufacturing purposes. 

If the terms "manufacturer" and "producer" are to be 
whittled away by fine distinctions, the intent and purpose 
of Congress to impose a tax upon automobile parts pro- 
duced and sold to jobbers and wholesalers will neces- 
sarily be defeated. In re First Nat. Bank, 152 Fed. 64, 
67 (C. G. A. 8th). 

If appellee had imported used connecting rods and done 
nothing whatsoever to them and then had sold them, it 
would have incurred an excise tax under the statute in 
question as an "importer". 

In addition to the foregoing decisions, it may be noted 
that the taxpayers in the following cases voluntarily dis- 
missed their refund actions after the action of the Seventh 
Circuit Court of Appeals in the Clazvson & Bals case, 
supra : 



—44— 

S. & R. Grinding & Machine Co. v. United States 
(W. D. Pa.) (involving connecting rods), voluntarily 
dismissed on plaintiff's motion, despite the fact it earlier 
had obtained a favorable ruling on the Government's mo- 
tion to dismiss. The ruling on the motion to dismiss is 
reported in 27 F. Supp. 429. 

Federal-Mogul Corp. v. Kavanagh (E. D. Mich.) (in- 
volving connecting rods), voluntarily dismissed by tax- 
payer as the parties were about to proceed to trial. 

The foregoing Canadian decisions 7 are particularly ap- 
plicable because they involved a consideration of conten- 
tions similar to those advanced herein by appellee, under 
a revenue statute containing similar provisions. The tax- 
payer there contended that the old tires had not lost their 
identities as such during the "retreading" operations, that 
the names and numbers of the original manufacturers 
were not marred or obliterated, and that the taxpayer 
was merely the repairer of second-hand tires and not 
the manufacturer or producer thereof. However, each 
of the contentions was rejected by the Supreme Court of 
Canada and the Exchequer Court on reasoning similar 
to that followed by the American decisions upon which 
we rely. 

It cannot be disputed that the used rods had lost their 
commercial value as connecting rods and, after the dis- 
mantling thereof, the salvaging of the usable forgings 



iBiltrite Tire Co. v. The King, 1937 Canada Law Rep. 364 
The King v. Biltrite Tire Co., 1937 Canada Law Rep. 1. 



—45— 

therefrom and the preparation of the forgings for tax- 
payer's operations, there remained prepared materials for 
manufacturing processes. Such prepared materials were 
not then connecting rods but mere forgings on which ap- 
pellee thereafter performed grinding operations, machin- 
ing operations, added other materials, assembled the same 
and employed skill before completing its marketable prod- 
uct and placing it in stock for sale to wholesalers. The 
position of appellee is the same as if it had purchased 
forgings salvaged (from old or worn-out articles) and 
prepared by the vendor for babbitting, bushing, machin- 
ing, assembling and finishing operations. If then appel- 
lee had purchased from a third party the remaining nec- 
essary materials, consisting of babbitt, shims, nuts, bolts 
and bushings, and continued with all subsequent steps, it 
could hardly be suggested that the article in its final 
condition had not been produced or manufactured by 
appellee. And the mere fact that appellee has itself 
performed the defined operations on the old forgings 
cannot exclude it from the operation of the taxing statute. 

It is suggested that the old or worn-out rod did not 
lose its identity qua rod and that, therefore, the appellee 
could not be said to have manufactured or produced a 
rod. However, when one bears in mind the various 
steps taken by appellee and particularly the state of 
the article when the babbitt bearing, bronze bearing, bolts, 
nuts and shims were removed, it would appear that appel- 
lee cannot be any less the manufacturer of a connecting 
rod because it started with something that had once been 



a usable rod than if, as suggested above, it had commenced 
with several substances purchased from different sources. 

The following decisions, all of which are of District 
Courts, are against the Government. However, most of 
them have been, in effect, overruled by the later decisions 
of the Seventh Circuit Court of Appeals and of this 
Court, as hereinafter indicated: 

Monteith Brothers Co. v. United States (N. D. Ind.), 
decided October, 1936, not officially reported but published 
in 1936 Prentice-Hall, Vol. 1, par. 1710 (involving arma- 
tures and connecting rods), overruled by the Seventh 
Circuit Court of Appeals in the Clawson & Bals case, 
supra. 

Hempy-Cooper Mfg. Co. v. United States (W. D. Mo.), 
decided May 6, 1937, not officially reported but published 
in 1937 Prentice-Hall, Vol. 1, par. 1461 (involving con- 
necting rods). 

Bardet v. United States (N. D. Cal.), decided May 18, 
1938, not officially reported but published in 1938 Pren- 
tice-Hall, Vol. 1, par. 5507 (involving connecting rods). 
This case was overruled by the decision of this Court 
in the Armature Exchange case, supra. 

Becker-Florence Co. v. United States (W. D. Mo.), 
decided December 27, 1938, not officially reported but pub- 
lished in 1939 Prentice-Hall, Vol. 1, par. 5161 (involving 
armatures). 

Con-Rod Exchange, Inc. v. Henricksen, 28 F. Supp. 
924 (W. D. Wash.) (involving connecting rods). This 



case was overruled by the decision of this Court in the 
Armature Exchange case, supra. 

.Armature Rewinding Co. v. United States (E. D. Mo.), 
decided September 30, 1940, not officially reported but 
published in 1940 Prentice-Hall, Vol. 4, par. 62,887 (in- 
volving generators and armatures). This case is now 
pending on the Government's appeal before the Eighth 
Circuit Court of Appeals. 

The Con-Rod case, supra, was not appealed because 
both it and the Armature Exchange case, supra, were 
decided at about the same time by Judge Yankwich and 
it was deemed by the Solicitor General that the appeal 
in the Armature Exchange case would suffice, especially 
when a successful appeal in the Con-Rod case would have 
resulted in a judgment for considerably less than the 
cost of appeal. The remaining cases which were not 
appealed did not present satisfactory records. However, 
we contend that the several adverse District Court deci- 
sions were erroneous. 

The case of Hartranft v. Wiegman, 121 U. S. 609, 
relied on by the court below in its opinion, is not in 
point. It, and other Supreme Court decisions usually 
urged by taxpayers in these cases, were rejected in the 
Armature Exchange case as being inapplicable. 



—48— 

IV. 

The Government's Position Is Also Supported by the 
Treasury Regulations Which in the Light of the 
History and Reenactment of the Taxing Provi- 
sions Without Material Change Have Been Given 
Congressional Approval. 

The Government's position is consistent with Treasury 

Regulations 46, 1932 Edition: 

Art. 4. Who is a manufacturer or producer. — 
As used in the Act, the term "producer" includes a 
person who produces a taxable article by processing, 
manipulating, or changing the form of an article, or 
produces a taxable article by combining or assembling 
two or more articles. (Italics supplied.) 

Section 316.4 of Treasury Regulations 46, 1940 Edition, 
is to the same effect as Article 4, supra, except that the 
later Regulations are even more specific, namely: 

Sec. 316.4. Who is a manufacturer. — the term 
"manufacturer" includes a person who produces a 
taxable article from scrap, salvage, or junk material, 
as well as from new or raw material (1) by process- 
ing, manipulating, or changing the form of an ar- 
ticle, or (2) by combining or assembling two or more 
articles. (Italics supplied.) 

Article 7 of the applicable Treasury Regulations, as 
revised in December, 1920, defines a manufacturer as 
generally a person who — 

(1) actually makes a taxable article; or (2) by 
changes in the form of an article produces a taxable 
article; or (3) by the combination of two or more 
articles produces a taxable article. ( Italics supplied. ) 



—49— 

The italicized part of the 1920 revision of the Regulations 
was carried forward in Regulations 47, revised March, 
1926, as Article 6 thereof, also in the 1921 and 1924 
Regulations under the 1921 and 1924 Revenue Acts. 

The same definition of manufacturer was also carried 
forward in Regulations 46, under the Revenue Act of 
1932, as Article 4 thereof as shown above. 

The following is a history of the enactment and re- 
enactment of the excise tax law with respect to automo- 
bile parts and accessories : 

The Revenue Act of 1918, c. 18, 40 Stat. 1057, Sec- 
tion 900(3), was the first to impose a tax on automobile 
parts and accessories as distinguished from automobiles 
themselves which were first taxed under the 1917 Act. 
The rate, under the 1918 Act, on such parts and acces- 
sories was 5%. The tax was reenacted by Section 900(3) 
of the Revenue Act of 1921, c. 136, 42 Stat. 227, and the 
rate was the same, effective as of January 1, 1922. 

Under Section 600(3) of the Revenue Act of 1924, c. 
234, 43 Stat. 253, the tax was carried forward and the 
rate was reduced to 2y 2 %. 

The Revenue Act of 1926, c. 27, 44 Stat. 9, Section 
600, taxed "automobile chasses and bodies and motor- 
cycles (including tires, inner tubes, parts, and accessories 
therefor, sold on or in connection therewith or with the 
sale thereof" at 3%. Therefore, under the 1926 Act, 
parts and accessories sold separately were not taxed. 

The Revenue Act of 1928, c. 852, 45 Stat. 791, Section 
421, repealed, as of the date of its enactment, May 29, 
1928, the taxes on automobiles. 



—50— 

By Section 606 of the Revenue Act of 1932, the tax 
again was placed on automobiles, parts and accessories, 
among other things. 

The 1932 Act remained in effect during the passage of 
all subsequent Revenue Acts and was reenacted in the 
subsequent Acts or extended by resolution, and was re- 
enacted in the Internal Revenue Code as Section 3403. 

Section 3403 was amended by Section 1 of the Revenue 
Act of 1939, c. 247, S3 Stat. 862, and Sections 209 and 
216 of the Revenue Act of 1940, c. 419, 54 Stat. 516, but 
was not changed so far as here material. 

Section 210 of the 1940 Act amends the Internal Rev- 
enue Code by adding a new section thereto, the effect 
of which is to change the rate on automobile parts 
and accessories from 2% to 2]/ 2 % for the period after 
June 30, 1940, and before July 1, 1945. 

If, in addition to Article 4 of Treasury Regulations 
46, approved June 18, 1932, providing that as used in 
the Act the term "producer" includes a person who pro- 
duces a taxable article by combining or assembling two 
or more articles, more were needed, attention is directed 
to the fact that this provision has appeared in the Treas- 
ury Regulations since 1920, during which time the taxing 
statute has been reenacted several times without material 
change. Under the established rule Congress must be 
taken to have approved the administrative construction 
and thereby to have given it the force of law. H elver ing 
v. Reynolds Tobacco Co., 306 U. S. 110, 115; United 
States v. Armature Exchange, supra. 



—51— 

See, also, S. T. 896, 1940-2 Cum. Bull. 252, published 
February 19, 1940, to the effect that persons who manu- 
facture or produce connecting rods from used or worn- 
out connecting rods and new material are manufacturers 
and producers within the meaning of Section 606 of the 
Revenue Act of 1932, and are subject to tax thereunder 
upon the sales of such rods. 

By S. T. 896, the following earlier rulings were modi- 
fied to accord with the principles laid down in the Claw- 
son & Bals decision: 

S. T. 606, XI-2 Cum. Bull. 476 (1932), relating to 
rebuilt taxi meters. 

S. T. 648, XII-1 Cum. Bull. 384 (1933), and S. T. 
812, XIV-1 Cum. Bull. 406 (1935), relating to retreaded 
and rebuilt tires. 

Thus, under any view of the case, the evidence brings 
appellee squarely within the definition of a manufac- 
turer or producer as set forth in the Regulations for 
the past twenty years, namely, that "a person who * * * 
produces a taxable article by combining or assembling two 
or more articles" is included in the term "producer" as 
used in the Act. 

In conclusion, it is submitted that under the applica- 
ble statute, decisions, Regulations, and undisputed evidence 
the court below should have made ultimate findings of 
fact and entered judgment in favor of appellant for the 
amount of its counterclaim, and dismissing appellee's 
complaint. 



—52— 
Conclusion. 

It is submitted that the law and undisputed evidence do 
not support the ultimate findings, conclusions, and judg- 
ment below. The judgment should be reversed. 

Respectfully submitted, 

Samuel O. Clark, Jr., 
Assistant Attorney General. 

J. Louis Monarch, 
George H. Zeutzius, 
Special Assistants to the Attorney General. 

Wm. Fleet Palmer, 
United States Attorney. 

E. H. Mitchell, 

Assistant United States Attorney , 

Armond Monroe Jewell, 

Assistant United States Attorney. 

September 26th. 1941. 



APPENDIX. 

Revenue Act of 1932, c. 209, 47 Stat. 169: 

Sec. 606. Tax on Automobiles, Etc. 

There is hereby imposed upon the following articles sold 
by the manufacturer, producer, or importer, a tax equiva- 
lent to the following percentages of the price for which 
so sold: 

(c) Parts or accessories (other than tires and inner 
tubes) for any of the articles enumerated in subsection 
(a) or (b), 2 per centum. * * * 

[Note: Subsections (a) and (b) refer to automo- 
biles, automobile trucks and motorcycles.] 

Treasury Regulations 46, approved June 18, 1932: 

Art. 4. Who is a manufacturer or producer. — As 
used in the Act, the term "producer" includes a person 
who produces a taxable article by processing, manipu- 
lating, or changing the form of an article, or produces 
a taxable article by combining or assembling two or 
more articles. 

Under certain circumstances, as where a person manu- 
factures or produces a taxable article for a person 
who furnished materials and retains title thereto, the 
person for whom the taxable article is manufactured or 
produced, and not the person who actually manufactures 
or produces it, will be considered the manufacturer. 

A manufacturer who sells a taxable article in a knock- 
down condition, but complete as to all component parts, 
shall be liable for the tax under Title IV and not the 
person who buys and assembles a taxable article from 
such component parts. 



— 2— 

Art. 41. Definition of parts or accessories. — The term 
"parts or accessories" for an automobile truck or other 
automobile chassis or body, or motorcycle, includes (a) 
any article the primary use of which is to improve, repair, 
replace, or serve as a component part of such vehicle or 
article, (b) any article designed to be attached to or used 
in connection with such vehicle or article to add to its 
utility or ornamentation, or (c) any article the primary 
use of which is in connection with such vehicle or article 
whether or not essential to its operation or use. 

The term "parts and accessories" shall be understood to 
embrace all such parts and accessories as have reached 
such a stage of manufacture that they constitute articles 
commonly or commercially known as parts and accessories 
regardless of the fact that fitting operations may be re- 
quired in connection with installation. The term shall 
not be understood to embrace raw materials used in the 
manufacture of such articles. 

Spark plugs, storage batteries, leaf springs, coils, timers, 
and tire chains, which are suitable for use on or in con- 
nection with, or as component parts of, automobile truck 
or other automobile chassis or motorcycles, are considered 
parts or accessories for such articles whether or not pri- 
marily designed or adopted for such use. 



No. 9746 

z 

IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



United States of America, 

Appellant, 

vs. 
J. Leslie Morris Company, Inc., a corporation, 

Appellee. 



BRIEF FOR THE APPELLEE. 



Darius F. Johnson, 
1124 Van Nuys Building, Los Angeles, 

Meserve, Mumper & Hughes, 
615 Richfield Building, Los Angeles, 
Attorneys for Appellee. 



FILED 

OCT 2 5 1941 



Parker & Baird Company, Law Printers, Los Angeles. - Kj BRItlNg 

•Lsmc 



TOPICAL INDEX. 

PAGE 

Opinion Below 1 

Jurisdiction 1 

Question Presented 1 

Statutes, Regulations and Rulings.... 1 

Statement 2 

Argument 4 

I. 

The rebabbitting of used second-hand connecting rods is not 
the manufacture or production of connecting rods, but is 
only the repair, restoration or reconditioning thereof 4 

(a) Manufacturing or production consists of the applica- 
tion of labor or skill by hand or machinery so that as 
a result thereof a new, different and useful article of 
commerce is produced 4 

(b) The mere repair, restoration or reconditioning of an 
article does not constitute manufacturing or production 13 

II. 

Taxing statutes must be strictly construed and should be so 
construed as to produce uniformity and equality in their 
application. Their provisions cannot be extended by im- 
plication 26 

Conclusion 31 

Appendix : 

Revenue Act of 1932, c. 209, 47 Stat. 169, Sec. 606 App. p. 1 

Treasury Regulations 46, approved June 18, 1932, Art 4 

App. p. 1 



TABLE OF AUTHORITIES CITED. 

Cases. page 

Alaska Consolidated Canneries v. Territory of Alaska, 16 Fed. 

(2d) 256 29 

Bankers Trust Co. v. Bowers, 295 Fed. 89 29 

Cadwalader v. Jessup & Moore, 149 U. S. 350 22 

City of Louisville v. Zinmeister (Ky.), 222 S. W. 958 27 

Clawson & Bals v. Harrison, 108 Fed. (2d) 991 23 

Erskine v. United States, 84 Fed. (2d) 690 29 

Foglesong Machine Co. v. Randall Co., 239 Fed. 893 19 

Goodyear Shoe Machinery Co. v. Jackson, 112 Fed. 146 19, 20 

Hartranft v. Wiegmann, 121 U. S. 609 8, 28 

Hess-Bright Mfg. Co. v. Bearing Co., 271 Fed. 350.... 16 

Hughes v. City of Lexington, 277 S. W. 981 12 

Klepper v. Carter, 286 Fed. 370 7 

Koshland v. Helvering, 298 U. S. 441 31 

Manhattan General Equipment Co. v. Commissioner, 297 U. S. 

129 31 

Miller v. Standard Nut Margarine Co., 284 U. S. 498 28 

Miller Hatcheries v. Incubator Co., 41 Fed. (2d) 619 20 

Spreckels Sugar Refining Co. v. McClain, 113 Fed. 244 29 

State v. J. J. Newman Lumber Co. (Miss.), 59 So. 923 20 

The King v. Biltrite Tire Co., 1937 Canadian Law Rep. 1 25 

The King v. Boultbee, Ltd. (1938), 3 Dominion Law Rep. 664.. 25 

Thurman, Collector, v. Swisshelm, 36 Fed. (2d) 350 7 

Wilson v. Simpson, 9 How. 109 14 

Statutes. 
Revenue Act of 1932, Sec. 606(c) 1 

Textbooks. 
Commerce Clearing House, 1939 Standard Federal Tax Service, 
Vol. 4, para. 9219 23 



No. 9746 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



United States of America, 

Appellant, 
vs. 

J. Leslie Morris Company, Inc., a corporation, 

Appellee. 



BRIEF FOR THE APPELLEE. 



Opinion Below. 

The memorandum opinion of the District Court [R. 
32-36] is unreported. 

Jurisdiction. 

The statement as to the jurisdiction of this Court con- 
tained in appellant's opening brief is accepted by appellee. 

Question Presented. 

Whether sales of rebabbitted connection rods by appel- 
lee were taxable under section 606(c) of the Revenue Act 
of 1932, which imposed a tax upon automobile parts "sold 
by the manufacturer, producer, or importer" thereof. 

Statutes, Regulations and Rulings. 

The applicable statutes, regulations and rulings involved 
will be found in the appendix to this brief. 



— 2— 

Statement. 

The case was tried to the court without a jury upon 
evidence consisting of two witnesses offered by appellee 
and numerous exhibits offered by each of the parties. The 
court rendered a memorandum opinion [R. 32-36] and 
findings of fact and conclusions of law [R. 36-60] in 
favor of appellee. 

The practice of rebabbitting worn or damaged automo- 
bile connecting rods has existed for many years prior to 
the inactment of the Revenue Act of 1932. Originally 
the individual repair shops performed this operation, in 
fact this is true in certain instances today. However, 
because of the volume of business and the expense involved 
it has become the practice for this work to be performed 
by repair shops specializing in this work. 

A connecting rod is the mechanical means by which the 
piston is connected to the crankshaft. It transmits the 
energy created by the explosion of gasoline vapor in the 
cylinder to the crankshaft. [R. 89.] In order to mini- 
mize the wear created by the friction there must be bear- 
ings provided at each end of the rods. At the large or 
lower end of the connecting rods there are thin layers of 
babbitt metal which separate the rod from the crankshaft 
journal which absorbs the wear. [R. 109.] The rods 
are divided at the center of the large end to permit in- 
stallation on the crankshaft journal. The lower part or 
cap, being fastened to the upper part or shank, with two 
bolts and nuts. [R. 108.] 

During the period herein involved the appellee owned 
plants in New York, Columbus, Chicago, Los Angeles, 
Portland and Seattle. [R. 163.] The Los Angeles and 
Chicago plants were the largest. [R. 164-165.] It is 



— 3— 

the practice of automobile repair men to send worn or 
damaged rods to jobbers in exchange for rebabbitted rods 
of the same type. The jobbers in turn send these rods to 
appellee or others in the same business to have them re- 
babbitted or exchanged for rods of the same type which 
have previously been rebabbitted. [R. 102-103.] 

In order to prevent delay which would result if each 
customer's rods were rebabbitted and returned, appellee 
has acquired a stock of used rods which have been rebab- 
bitted and placed on the shelf for immediate exchange for 
worn or damaged rods of the same type. [R. 166.] 

Ninety-five per cent of the rods sold by appellee were 
used rods sent in by jobbers in exchange for rebabbitted 
rods or to be rebabbitted and returned. The remaining 
five per cent were received from dealers in used rods or 
were purchased from automotive representatives. [R. 
120.] 

In order to economically handle the large volume of 
business which appellee enjoyed it was necessary to main- 
tain shops utilizing considerable machinery. Appellant de- 
votes much space in the opening statement in it's brief 
to the discussion of the number of employees, the ma- 
chinery used and the process through which the rods 
passed. Appellee contends that the number of employees, 
amount of machinery and process has no bearing on the 
taxability of the parts sold. That the test of taxability 
is whether this appellee was or was not a manufacturer 
or producer within the meaning of section 606(c) of 
the Revenue Act of 1932. 



ARGUMENT. 

I. 
The Rebabbitting of Used Second Hand Connecting 
Rods Is Not the Manufacture or Production of 
Connecting Rods, But Is Only the Repair, 
Restoration or Reconditioning Thereof. 

(a) Manufacturing or Production Consists of the 
Application of Labor or Skill by Hand or 
Machinery So That as a Result Thereof a 
New, Different and Useful Article of Com- 
merce Is Produced. 

In this case appellee seeks a refund of manufacturer's 
excise taxes paid by it upon the sale of used, second hand 
automobile connecting rods which it had rebabbitted. All 
of the connecting rods sold by appellee were parts of auto- 
mobile engines and over ninety-five (95%) per cent of 
them had been used and as a result of such use had be- 
come worn or damaged. The evidence by the testimony 
of J. Leslie Morris which was uncontradicted is that the 
connecting rods sent to appellee's plant for rebabbitting 
could continue to operate in an internal combustion en- 
gine. [R. 123.] It was further testified by Mr. Morris 
that the rebabbitting was the building up of the bearing 
so that it would operate more efficiently. [R. 123.] In 
fact the witness stated [R. 123] : 

"Preserve the oil pressure, and things of that sort. 
It will function. In fact, I suppose 95 per cent of 
the automobiles that pass this building right now, the 
bearings are too loose, but they are still running just 
the same." 



— 5— 

The appellee herein merely repaired used connecting rods 
which had been worn or damaged through use as com- 
ponent parts of automobile engines. The Court made a 
finding of fact to the effect that appellee had not manu- 
factured any connecting rods. In paragraph III of the 
findings of fact the Court found in part [R. 39] : 

". . . All of said connecting rods were manu- 
factured by persons, firms or corporations other than 
plaintiff and before their acquisition by plaintiff had 
been used as operating parts for automobile motors, 
and by reason of such use the babbitt metal lining 
constituting a part of said connecting rods had be- 
come worn, chipped, roughened and otherwise im- 
paired; . . ." 

Unrefuted testimony was to the effect that appellee never 
manufactured any new rods and did not have the equip- 
ment to manufacture them. [R. 98.] The same evidence 
also established that appellee never removed the manu- 
facturer's identification marks from any rods rebabbitted 
by it or put on any identification marks of its own. [R. 
99.] The method of acquisition and repairing of the 
connecting rods was fully set forth in the record. (Plain- 
tiff's Exhibits 1 to 32.) 

If appellee's rebabbitting process commenced with a 
connecting rod and ended with a connecting rod, it is 
obvious that nothing has been manufactured or produced. 
No new article of commerce has been produced by the 
process, no new thing has been brought into existence. 
When the rebabbitter commenced his work he had a con- 
necting rod and when his work was completed he still had 
the same connecting rod. It makes no difference how 
long it took him to do the work, or how many different 



pieces of machinery he employed in the process, or whether 
he worked alone in a small shop, or whether he employed 
many other workmen in a large plant, or whether after 
the process was completed, he immediately reinstalled the 
connecting rod in the automobile from which it was taken, 
or whether he laid it upon a shelf and subsequently ex- 
changed it for another used, second-hand connecting rod 
of the same type. The question is, "What did the re- 
babbitter do?" Did he produce or manufacture a new 
article? Did he merely repair an article which someone 
had previously produced or manufactured? Manifestly, 
he has repaired a connecting rod. His work commenced 
after the manufacture or production of that connecting 
rod had long since been completed and the rod had actually 
seen service as an operating part of an automobile engine. 

The meaning of the words, "manufacturer" and "pro- 
ducer" is clear. A manufacturer is one who makes some- 
thing new, according to Webster's New International Dic- 
tionary : 

"1. To make (wares or other products) by ma- 
chinery or by other agency; as to manufacture cloth, 
nails, glass, etc., to produce by labor, esp., now, ac- 
cording to an organized plan and with division of 
labor, and usually with machinery." 

2. To work, as raw or partially wrought materials, 
into suitable forms for use, as to manufacture wool, 
iron, etc. 

3. To fabricate; to invent; also, to produce me- 
chanically ; 

The terms manufacture and produce must be com- 
pared with the word "repair", a word which is 
repugnant to and exclusive of manufacture or produce. 



—7— 

To repair, defined by Webster's New International 
Dictionary, is to restore to a sound or good state 
after decay, injury, dilapidation, or partial destruc- 
tion; as to repair a house, a road, a shoe, also to 
renew, revive or rebuild. 

The principles involved in this case were recognized and 
stated by the court in Thurman, Collector v. Swisshelm 
(C. C. A. 7), 36 Fed. (2d) 350. In that case the tax- 
payer dealt in automobiles. They bought completed Ford 
automobiles from the Ford Motor Company or its agents. 
They bought from the Ames Company automobile bodies 
so constructed that they would fit the Ford chasses. 
They would remove the Ford bodies from the automobiles 
and replace them with the Ames bodies. The question 
was whether the taxpayer by that process became the 
manufacturer or producer of automobiles so as to become 
liable for the manufacturer's excise tax on the automobiles. 
The court held that they were not manufacturers or pro- 
ducers of automobiles. The court then distinguished the 
case of Klepper v. Carter, 286 Fed. 370, which is cited by 
appellant as authority, and said 1. c. 351 : 

"The facts are different in that there was no truck 
figured in the transaction until the parts had been 
assembled and connected; while here appellees bought 
the completed automobile upon which the tax had 
already been paid." 

The principles underlying the Swisshelm case is in no- 
wise different from the case at bar. Swisshelm com- 
menced his process with automobiles completely manufac- 
tured and tax paid by the manufacturer; the appellee in 



this case commenced its work with connecting rods pre- 
viously manufactured and tax paid by a manufacturer. 
When Swisshelm finished his process, he still had an auto- 
mobile — he had created nothing new; when appellee in 
this case completed its process, it still had connecting 
rods — it had created nothing new. 

The courts have been frequently called upon to define, 
and apply the definition of, manufacture. A leading and 
often cited case is Hartranft v. Wiegmann, 121 U. S. 
609. The issue in that case concerned the rate of duty to 
be levied upon certain shells depending upon whether 
they were or were not "manufactured". The question in- 
volved and the facts are stated in the opinion by Mr. Jus- 
tice Blatchford, as follows, 1. c. 613-14: 

"The question is whether cleaning of! the outer 
layer of the shell by acid, and then grinding off the 
second layer by an emery wheel, so as to expose the 
brilliant inner layer is a manufacture of the shell, 
the object of these manipulations being simply for 
the purpose of ornament, and some of the shells being 
afterwards etched by acids, so as to produce inscrip- 
tions upon them. It appears that these shells in ques- 
tion were to be sold for ornaments, but that shells 
of these descriptions have also a use to be made into 
buttons and handles of penknives; and that there is 
no difference in name and use between the shells 
ground on the emery wheel and those not ground. It 
is contended by the government that the shells pre- 
pared by the mechanical or chemical means stated 
in the record, for ultimate use, are shells manufac- 
tured, or manufacturers of shells, within the meaning 
of the statute." 



The conclusion of the court and the reasoning support- 
ing it are set forth in the following excerpt from the 
opinion, 1. c. 615: 

"We are of the opinion that the shells in question 
here were not manufactured, and were not manufac- 
tures of shells, within the sense of the statute impos- 
ing a duty of 35 per centum upon such manufac- 
turers, but were shells not manufactured, and fell un- 
der that designation in the free list. They are still 
shells. They had not been manufactured into a new 
and different article, having a distinctive name, char- 
acter or use from that of a shell. The application 
of labor to an article, either by hand or by mechanism, 
does not make the article necessarily a manufactured 
article, within the meaning of that term as used in 
the tariff laws. Washing and scouring wool does not 
make the resulting wool a manufacture of wool. 
Cleaning and ginning cotton does not make the result- 
ing cotton a manufacture of cotton. In 'Schedule M' 
of Section 2504 of the Revised Statutes, page 475, 
2nd Edition, a duty of 30 per cent ad valorem is 
imposed on 'coral, cut or manufactured'; and, in Sec- 
tion 2505, page 484, 'coral, marine, unmanufactured', 
is exempt from duty. These provisions clearly imply 
that, but for the special provisions imposing a duty on 
cut coral, it would not be regarded as a manufactured 
article, although labor was employed in cutting it. In 
Frazee v. Moffit, 20 Blatchf. 267, it was held that hay 
pressed bales, ready for market, was not a manufac- 
tured article, although labor had been bestowed in cut- 
ting and drying the grass and baling the hay. In 
Lazvrence v. Allen, 48 U. S. 7 How. 785, it was held 
that india rubber shoes, made in Brazil, by simply 
allowing the sap of the india rubber tree to harden 
upon a mold, were a manufactured article because it 



—10— 

was capable of use in that shape as a shoe, and had 
been put into a new form, capable of use and design 
to be used in such new form. In United States v. 
Potts, 9 U. S. 5 Cranch 284, round copper plates 
turned up and raised at the edges from four to five 
inches by the application of labor, to fit them for 
subsequent use in the manufacture of copper vessels, 
but which were still bought by the pound as copper 
for use in making copper vessels, were held not to 
be manufactured copper. In the case of United 
States v. Wilson, 1 Hunt's Merchants' Magazine 167, 
Judge Betts held that marble which had been cut into 
blocks for the convenience of transportation was not 
manufactured marble, but was free from duty, as 
being unmanufactured. 

"We are of the opinion that the decision of the 
circuit court was correct. But, if the question were 
one of doubt, the doubt would be resolved in favor 
of the importer, 'as duties are never imposed on 
citizens upon vague or doubtful interpretations'. 
Powers v. Barney, 5 Blatchf. 202; U. S. v. Isham, 
84 U. S., 17 Wall. 496, 504; Gurr v. Scudds, 11 
Exch. 190, 191 ; Adams v. Bancroft, 3 Sumn. 384." 

In Anheuser-Busch Brezvincj Association v. U. S., 207 
556, the plaintiff sued to recover certain import duties 
which it had paid on corks designed for use in bottling 
beer. Under the act there involved plaintiff was required 
to prove as the basis of its refund or "drawback" that 
the corks involved were not manufactured corks, but 
merely materials imported to be used in the manufacture 
of corks in the United States. The evidence showed that 
the corks when imported into this country from Spain had 
already been cut by hand to the required size. It was 



—11— 

further shown that in such condition, however, they were 
not suitable for use in bottling beer because they would 
not retain the gas in the bottle and because they would 
impart a cork taste to the beer, thereby making it un- 
marketable and unfit for use. After importation, how- 
ever, the corks were subjected in the brewing company's 
plant to various processes and treatment consuming several 
days of time, during which the corks were treated, pro- 
cessed, sealed and coated so as to render them useful for 
the intended purpose. The court found that the process to 
which the corks were subject did not constitute manufac- 
ture; that the corks were manufactured before they were 
imported and that the brewing company was not entitled 
to its refund. In the opinion by Mr. Justice McKenna 
it is said, 1. c. 559: 

"The corks in question were, after their importa- 
tion, subject to a special treatment which, it is con- 
tended, caused them to be articles manufactured in the 
United States of 'imported materials' within the mean- 
ing of Section 25. The Court of Claims decided 
against the contention and dismissed the petition. 41 
Ct. CI. 389. 

"The treatment to which the corks were subjected 
is detailed in Finding 3, inserted in the margin. 

"In opposition to the judgment of the Court of 
Claims counsel have submitted many definitions of 
'manufacture', both as a noun and a verb, which, how- 
ever applicable to the cases in which they were used, 
would be, we think, extended too far if made to cover 
the treatment detailed in Finding 3 or to the corks 
after the treatment. The words of the statute are 
indeed so familiar in use and meaning that they are 
confused by attempts at definition. Their first sense 
as used is fabrication or composition, — a new article 



—12— 

is produced of which the imported material constitutes 
an ingredient or part. When we go further than this 
in explanation, we are involved in refinements and in 
impractical niceties. Manufacture implies a change, 
but every change is not manufacture, and yet every 
change in an article is the result of treatment, labor, 
and manipulation. But something more is necessary, 
as set forth and illustrated in Hartranft v. Wieg- 
mann, 121 U. S. 609, 7 Sup. Ct. Rep. 1240. There 
must be transformation; a new and different article 
must emerge, 'having a distinctive name, character or 
use' '. This cannot be said of the corks in question. A 
cork put through the claimant's process is still a 
cork." 

In Hughes v. City of Lexington, 277 S. W. 981, the 
appellant was a corporation engaged in the business of 
making and selling ice cream. Nevertheless, the City of 
Lexington contended that the corporation was not en- 
gaged in manufacturing within the meaning of the state 
statutes which exempt from city taxes machinery, ma- 
terial and supplies used in manufacturing. In the opinion 
by Clark, C. J., it is said, 1. c. 982: 

"The sense in which the term is here used, as well 
as the purpose intended to be accomplished by the 
act, is quite plain. Obviously, the term 'engaged in 
manufacturing' was not employed in any technical 
sense, but must be accorded its ordinary meaning as 
commonly understood. And, while incapable of exact 
definition, nevertheless it is true, as was stated in 
several of the above cases, that according to common 
understanding and generally speaking, manufacturing 
consists in the application of labor or skill by hand 



—13— 

or machinery to material so that as a result thereof, 
a nezv, different and useful article of commerce is 
produced." 

The foregoing- cases emphasize and reiterate the prin- 
ciple that whether a given process constitutes manufac- 
turing depends upon whether the process results in the 
creation of a new thing. If that which emerges at the 
conclusion of the process is the same thing which entered 
the process at its beginning, notwithstanding some labor 
and some new materials have been expended upon it dur- 
ing the process — in other words, if the thing retains its 
identity during the course of the process and after it is 
completed — then no manufacturing or production has oc- 
curred. If the article before the process commenced was 
a cork and it emerged from the process still a cork, there 
has been no manufacture. By the same token, the prin- 
ciple as applied to the case at bar leads inevitably to the 
conclusion that since the connecting rods in question did 
not lose their identity during the rebabbitting process, 
but were connecting rods when they entered plaintiff's 
plant and were still connecting rods when they left the 
plant, there was no manufacture. 

(b) The Mere Repair, Restoration or Recondition- 
ing of an Article Does Not Constitute Manu- 
facturing or Production. 

An essential distinction must be preserved between 
manufacture which, as above shown, results in the creation 
of a new article, and mere repair which results only in 
the restoration of partial injury but does not create a new 
article. When an article which consists of several com- 
ponent parts sustains wear or suffers injury to one of 



—14— 

those parts, the plain economics of the situation dictate 
that the injured part, if possible, shall be replaced or re- 
paired, rather than that the entire article shall be waste- 
fully discarded. A man may drop his watch and break 
the balance staff so that its usefulness as a timepiece is, 
for the time being, destroyed. But in such a case the owner 
does not throw his watch away and buy another. Instead, 
he takes it to a skilled mechanic who replaces the broken 
or damaged part and restores the watch to its former con- 
dition of usefulness. No one would argue in such a case 
that the jeweler had manufactured a watch. The admitted 
fact is that the owner took a watch to him. True, the 
watch was damaged and would not operate, but it was, 
nevertheless, a watch. After the jeweler had repaired 
the balance staff, it was still a watch — the same watch. 
It never lost its identity as a watch. Such is the process 
of repair or restoration as distinguished from the process 
of manufacture. 

The distinction between repair or restoration, on the 
one hand, and manufacture or construction, on the other 
hand, is often called in question and decided in patent 
cases. 

Perhaps the leading case in this field is Wilson v. 
Simpson, 9 How. 109. In that case the owner of a pat- 
ented planing machine had repaired or reconditioned his 
machine by placing therein certain new parts, particularly 
the knives or cutting tools which were the important opera- 
tive agency of the machine or, as it is sometimes said, 



— 15— 

the ultimate effective tool. Notwithstanding the fact that 
the cutting tools were the most vital and important part 
of the machine and did the very work for which the 
machine was designed, the court had no difficulty in find- 
ing that their replacement constituted only repair of the 
machine and not manufacture or production of a new 
machine so as to infringe the patent. In the opinion by 
Mr. Justice Wayne it is said, 1. c. 123: 

"But it does not follow, when one of the elements 
of the combination has become so much worn as to be 
inoperative, or has been broken, that the machine no 
longer exists, for restoration to its original use, by 
the owner who has bought its use. When the wear- 
ing or injury is partial, then repair is restoration and 
not reconstruction. 

"Illustrations of this will occur to anyone, from 
the frequent repairs of many machines for agricul- 
tural purposes. Also from the repair or replacement 
of broken or worn-out parts of larger and more com- 
plex combinations for manufactures. 

"In either case, repairing partial injuries, whether 
they occur from accident or from wear and tear, is 
. only refitting machine for use. And it is no more 
than that, though it shall be a replacement of an 
essential part of a combination. It is the use of the 
whole of that which a purchaser buys, when the 
patentee sells to him a machine; and when he repairs 
the damages which may be done to it, it is no more 
than the exercise of that right of care which every- 
one may use to give duration to that which he owns, 
or has a right to use as a whole." 



—16— 

In Hess-Bright Mfg. Co. v. Bearing Co., 271 Fed. 350, 
the court considered a case involving the alleged infringe- 
ment of a patent upon a ball bearing. The bearing con- 
sisted of a groove of a certain depth with balls exactly 
fitting it. The vendee of this patented bearing reground 
or smoothed up the groove, an operation which necessarily 
resulted in somewhat enlarging the groove. This neces- 
sitated installing larger balls to fit the enlarged groove. 
The question was whether or not the owners of the bear- 
ing had constructed a new bearing so as to infringe the 
patent or whether he had merely repaired his bearing. 
The court found that there was no manufacture involved 
in the process and that the patent had not been infringed. 
In the opinion by Dickinson, district judge, it is said, 
1. c. 351: 

"Council for plaintiff does not, of course, formulate 
the claim of right as defendant states it. He does 
not deny to the vendee of plaintiff the right to repair. 
What he does deny is any right, by using plaintiff's 
bearing as a model, to make a new bearing from the 
raw material of the old one. It is obvious that all 
this is nothing more than opposing statements of the 
effect of what the defendant had done. The defend- 
ant calls it the repair of old bearings. The plaintiff 
calls it new construction or reconstruction. Omitting 
the name properly to be applied to what was done, 
the fact finding is made that what was done was 
the regrinding of the groove of old bearings, and, 
when required, the substitution of new balls to fit the 
grooves enlarged by the regrinding. 

"The dividing line between repairs and a making 
over cannot be verbally located. What has been done 
can with more or less confidence be pronounced to 
be one or the other, but neither the one nor the 



—17— 

other can be denned. The judgment pronounced must 
in consequence partake of the ipse dixit or rescript 
character. A further consequence is that the ad- 
judged cases provide us with little for our guidance. 
With no thought of finding a better mode of expres- 
sion for the clearly presented views of counsel for 
plaintiff, it may be premised that a feature of the 
patented bearing is the metallic pathway provided in 
the form of a groove, which calls for the use of balls 
of a certain size. The nicety of adjustment required 
can be most emphatically expressed by the statement 
that the unit of measurement employed is the ten- 
thousandth part of an inch. This groove may, from 
use or abuse, be in need of being remade by regrind- 
ing. The lightest repolishing, almost, is such. 

"The argument that this is not repair, but a new 
construction, may be thus expressed : A bearing with 
a groove of a certain depth, with balls exactly fitting 
it, is sold by the plaintiff to A. Another bearing, 
with a different groove, calling for the next larger 
size balls, is sold to B. The first vendee smooths up 
the groove in his bearing, thus adopting it to the next 
larger size of balls. By so doing he has not repaired 
the bearing sold to him, but out of the material in 
this old bearing he has made a new one, which is not 
his old bearing, but a different bearing of the B type. 
In other words the old A bearing has lost its identity 
by destruction, and a new bearing, B, has been made. 
In a sense this is, of course, true; but it is only true 
in a sense. Identity is not lost by a mere change in 
size. The rule of which we are in search is a prac- 
tical rule for the guidance of practical men in prac- 
tical business. What the patentee sells is a concrete 
thing. It is a bearing. As long as it remains the 
bearing of the patent, it is what the patentee sold. 
The moment it becomes something else the patentee 



—18— 

is not concerned with it. The groove of the patent 
is still the groove of the patent, although enlarged. 
It no more loses its identity by enlargement than a 
river does by the change of the volume, due to the 
flow and ebb of the tide, or by the shoaling or deep- 
ening of its channel by the wash of its current. 

"The balls are no part of the groove, but some- 
thing used with it. There is no thought of denying 
the right of a vendee to repair balls. His right is 
not limited to any size of ball. The balls may be 
replaced without thought of infringement of any 
patent right. To deny vendee the right to smooth 
up a groove is to deny him all right to make repairs 
to the patented features of what was sold to him. 
The right cannot be limited to the use of the same 
balls as before. The only limitation is that he may 
repair, but cannot make a new bearing out of the 
material of the old. What is the one and what the 
other the facts of each case must determine. The 
line, as before observed, is most difficult to draw in 
words of description; it is by no means so difficult 
to draw in fact. 

"In the instant case our fact finding is that what 
defendant has done is to make repairs, and that it 
has not infringed upon the patent rights of plaintiff. 
The name given to anything is not necessarily indica- 
tive of what the thing is. A fact upon which de- 
fendant lays much stress has some interest as a co- 
incidence, but no other value. The fact referred to 
is that the plaintiff itself did what the defendant has 
done, and the department in charge of such work 
was called by plaintiff its 'Repair Department'. We 
attach as little importance to the distinction between 
repairing and selling second-hand bearings after they 
have been repaired." 



—19— 

In Foglesong Machine Co. v. Randall Co. (C. C. A. 6), 
239 Fed. 893, the defendant, being the owner of a pat- 
ented machine for the stuffing of horse collars, was ac- 
cused of infringing the patent by making certain repairs 
upon the machine. The court found that certain parts 
of the machine were perishable in that they were subject 
to greater wear than other parts. In that connection the 
court said, 1. c. 895 : 

"The question for decision is: Did the defendant 
repair or reconstruct the machine which it purchased 
from the Grand Rapids Company? In supplying a 
new hopper, stuffing rod nose, and disc, the defend- 
ant merely returned to use the injured or lost por- 
tions of the mechanism. This constitutes repairing, 
and not reconstruction." 

At another point the court said, 1. c. 896: 

"The machine was not so broken and worn out as 
to require replacement. The wear and injury were 
but partial. Under such circumstances, repair is not 
reconstruction, but restoration, that the mechanism 
may be kept up to the full performance of its duty." 

In Goodyear Shoe Machine Co. v. Jackson (C. C. A. 1), 
112 Fed. 146, it is said in the opinion by Colt, C. J., 
1. c. 151: 

"Where the patent is for a machine, which com- 
monly embraces the combination of many constituent 
elements, the question of infringement by the pur- 
chaser will turn upon whether the machine is only 
partially worn out or partially destroyed, or is en- 
tirely worn out, and so beyond repair in a practical 
sense. In the case of a patent for a planing machine 
composed of many parties it was held that the re- 



—20— 

placement of the rotary knives, 'the effective ultimate 
tool' of the machine, was repair, and not reconstruc- 
tion, Wilson v. Simpson, 9 How. 109. " 

A further statement of the principle involved, together 
with a citation of many cases, is found in Miller Hatch- 
eries v. Incubator Co. (C. C. A. 8), 41 Fed. (2d) 619. 

In State v. J. J. Newman Lumber Co. (Miss.), 59 So. 
923, the distinction between manufacture and repair is 
clearly stated by the Supreme Court of Mississippi as fol- 
lows, 1. c. 926: 

"A reasonable definition may be given to 'manu- 
facturing' (Century Dictionary) as the system of in- 
dustry which produces manufactured articles, and to 
'manufacture' as the production of articles for use 
from raw or prepared materials, by giving to these 
materials new forms, qualities, and properties, or com- 
binations, whether by hand labor or machinery, used 
more especially of production in a large way by 'Re- 
pair' is to make whole or restore an article or thing 
to its completeness. In the general knowledge of the 
affairs of business and life, it will hardly be difficult 
to class those persons who are engaged in such em- 
ployment." 

Applying the principles announced and reiterated in 
the foregoing cases to the facts of the case at bar, it is 
clear that the injury to the used, second-hand connecting 
rods which the plaintiff acquired and rebabbitted was but 
partial. Only the babbitt lining was injured or destroyed. 
They were not "entirely worn out, and so beyond repair 
in a practical sense" (Goodyear Shoe Machinery Co. v. 
Jackson, 112 Fed. 146, 151), is conclusively proved by the 
fact that the plaintiff did restore them to their former 



—21— 

condition of usefulness by the simple expedient of re- 
babbitting them. 

The physical facts speak for themselves. This Court 
has before it a box of connecting rods in various stages 
of rebabbitting. These exhibits themselves are the most 
eloquent testimony obtainable that the rods before re- 
babbitting were not entirely worn out and were not 
beyond repair in any sense, but had sustained only partial 
wear or injury. These rods were not "junk", and had 
not been discarded by their former owners as is con- 
tended by the appellant. On the contrary, they had been 
carefully preserved and had been sent to this plaintiff 
either directly or through jobbers so that they might be 
rebabbitted or exchanged for other rods of a similar type 
which had already been rebabbitted. 

J. Leslie Morris, testifying for the plaintiff, when asked 
what percentage of the connecting rods were procured 
from jobbers, stated [R. 119]: 

"A. Approximately 95 per cent." 

If these connecting rods were so far worn out and so 
beyond repair that they ceased to have any value over 
and above the melting pot value of the metal contained in 
them, why did appellee value them as high as $12.00 each 
[R. 113], when the top price for that kind of scrap steel 
was $11.00 a ton? 

There was no evidence that the used, second-hand con- 
necting rods which the plaintiff rebabbitted were, prior to 
the rebabbitting, so worn out and beyond repair that they 
had ceased to be connecting rods. On the contrary, un- 
der the undisputed evidence in this case, it is conclusively 
proved and established that these connecting rods had a 



—22— 

commercial value to the plaintiff and to other concerns 
engaged in the rebabbitting business far in excess of their 
"junk value". It is obvious that the comparatively great 
commercial value of used rods in excess of the melting 
pot value of the metals contained therein is due entirely 
to the fact that these rods may be restored to their former 
condition of usefulness and mechanical efficiency by a 
process of repair. This is the principle which underlies 
the decision of the Supreme Court in Cadzvalader v. Jessup 
& Moore, 149 U. S. 350. In that case the Supreme Court 
was called upon to decide whether certain imports of old 
india rubber shoes were dutiable as crude india rubber or 
as articles composed of india rubber. The shoes were 
so worn as to be beyond repair and for that reason they 
had ceased to be shoes and were valuable only for the 
rubber which they contained. It is said in the opinion 
by Mr. Justice Blatchford at page 354: 

"The uncontradicted testimony is to the effect that 
the only commercial use or value of the old india 
rubber shoes, or scrap rubber, or rubber scrap in 
question, is by reason of the india rubber contained 
therein, as a substitute for crude rubber; that the 
old shoes were of commercial use and value only by 
reason of the india rubber they contained, as a sub- 
stitute for crude rubber, and not by reason of any 
preparation or manufacture which they had under- 
gone; that they could not fairly be called 'articles com- 
posed of india rubber', and as such dutiable at 25 
per centum ad valorem; and that, although the shoes 
may have been originally manufactured articles com- 
posed of india rubber, they had lost their commercial 



—23— 

value as such articles, and substantially were merely 
the material called 'crude rubber'. They were not 
india rubber fabrics, or india rubber shoes, because 
they had lost substantially their commercial value as 
such." 

The appellant herein compares the above case to the 
case at bar, stating that the india rubber shoes had lost 
their commercial value as such articles, and substantially 
were the material called "crude rubber". It is agreed 
that they are correct in reference to the shoes, because 
they were not imported as used shoes to be repaired, but 
only for their value as crude rubber. In the instant case 
the connecting rods are repaired to restore them to their 
former condition of usefulness. If the appellee had con- 
verted the connecting rods into some other automobile part 
then there might be some color of right in the appellant's 
contention; in fact, this action would never have been 
instituted. 

The appellant bases great emphasis upon the decision 
in the case of Clawson & Bah v. Harrison, 108 Fed. (2d) 
991. In order to get a clear picture of this case it is 
necessary to refer to the findings of fact and conclusions 
of law as found by the trial court. This case is not pub- 
lished in the National Reporter System, but may be found 
in Commerce Clearing House, 1939 Standard Federal Tax 
Service, Vol. 4, Paragraph 9219. 

Clawson & Bals had new connecting rod forgings made 
for them, which they machined and babbitted. During 
part of the period covered by their suit, they removed all 



—24— 

marks of identification from rods manufactured by Gen- 
eral Motors Corporation and subsidiaries. They also re- 
babbitted used and second-hand connecting rods. At para- 
graph 10 of the findings of fact the trial court found: 

" Plaintiff kept but one stock with respect to each 
number and had but one outright price with respect 
to the rods, irrespective of whether they were pro- 
duced from entirely new castings or from scrap, and 
regarded the articles made from scrap as equivalent 
to any similar products made entirely from virgin 
metal. The rods made from scrap were in competi- 
tion with similar products made entirely of virgin 
metal and were just as serviceable. They were held 
out for sale and sold on the same basis and under 
the same warranties as the connecting rods produced 
from entirely virgin forgings. In other words, plain- 
tiff made no distinction between such connecting rods 
in the numbering, cataloging, selling, billing, advertis- 
ing, shipping, labeling, pricing, marketing, quality, 
warranty, guaranty or otherwise." 

As stated before, Clawson & Bals dealt in three kinds 
of connecting rods; newly-manufactured ones, rebab- 
bitted rods on which the identification marks had been 
removed and other rebabbitted rods. They at all times 
held themselves out as manufacturers, as in truth they 
were. As manufacturers they paid excise tax on all sales 
of rods, but did not include as part of the sale price the 
exchange value of the old rods received as part of the 
selling price. Later the Government assessed a total of 
$54,232.02, representing tax and interest on the addi- 
tional selling price as represented by the value of the old 
rods received in exchange. Immediately Clawson & Bals 
objected on the ground that they were only rebabbitters 



—25— 

of a part of the rods sold by them and that the additional 
tax paid by them of $54,232.02 should be refunded as 
representing the tax on the sale of rebabbitted connecting 
rods. 

It is submitted that the facts in the Clawson & Bals 
case are entirely different from the facts in the case at 
bar. Clawson & Bals did manufacture new connecting 
rod forgings from virgin metal, they removed identifica- 
tion marks from a part of the rods rebabbitted by them, 
they were manufacturers and held themselves out as such, 
whereas the appellee herein never manufactured a con- 
necting rod, or held itself out as a manufacturer, never 
removed any identification marks from the rods and, in 
fact, never did more than repair used and damaged con- 
necting rods. 

The appellant also cites as authority The King v. Bilt- 
rite Tire Co., 1937 Canadian Law Reports 1, and The 
King v. Boultbee, Ltd. (1938), 3 Dominion Law Reports 
664. However, it is contended by appellee that our courts 
must give precedent to the cases decided in our own coun- 
try and must consider as law the overwhelming authori- 
ties therein established before resorting to cases decided in 
foreign courts. 

In view of the uncontradicted testimony in the case at 
bar that the used, second-hand rods which appellee ac- 
quired and rebabbitted by reason of the preparation and 
manufacture which they had previously undergone, had 
a commercial value as connecting rods which was far in 
excess of the junk value of the metals therein contained. 
It is respectfully submitted that the findings and judg- 
ment of the learned trial court were correct and should 
be affirmed. 



—26— 

Taxing Statutes Must Be Strictly Construed and 
Should Be So Construed as to Produce Uniformity 
and Equality in Their Application. Their Pro- 
visions Cannot Be Extended by Implication. 

There was no dispute at the trial of this case as to 
the methods employed by the plaintiff in rebabbitting auto- 
mobile connection rods. In fact the method was covered 
by a series of 32 pictures and an explanatory statement for 
each, which were introduced as Plaintiff's Exhibits 1 to 32. 

The Government produced no direct evidence whatever 
that the rebabbitting of connecting rods is a manufactur- 
ing process or that the rebabbitting of connecting rods 
constitutes the manufacture of connecting rods. 

Being totally without any direct evidence that rebab- 
bitting is a manufacturing process, the Government ap- 
parently attempted to prove its case by the use of a 
syllogism which runs something like this: All large estab- 
lishments employing many men, using many machines and 
turning out a large volume of work, doing business on a 
large scale and publishing catalogues in which their 
product is described, are manufacturing establishments; 
plaintifT has all these characteristics; therefore, plaintiff 
is a manufacturing establishment. The major premise of 
this syllogism is, of course, untrue, and the conclusion is, 
therefore, completely false. Size and extent and volume 
of business do not constitute the test of manufacture. It 
is common knowledge that there are many machine shops 
much larger than plaintiff's which manufacture nothing, 
but are engaged only in repair work. 

If the taxing statute here involved is to be applied 
and administered by testing whether a company is a manu- 
facturer or a repairman by determining whether it does 



—27— 

business on a large scale or on a small scale, and whether 
it employs many men or few men, then the administra- 
tion of the taxing statute will result in the greatest in- 
equality and lack of uniformity. The rebabbitter who 
sells several thousand connecting rods a month will be 
taxed because he is large and the rebabbitter who sells 
only a few connecting rods a month will not be taxed 
because he is small. 

The mere fact that ownership of the connecting rods 
was vested in the appellee does not affect its status as 
a repairer. There is nothing to prevent appellee from 
acquiring title to used connecting rods or other automo- 
bile parts and repairing them before offering them for 
sale. Certainly there is no conflict here between the re- 
pairman being also the owner and vendor or only the 
repairman of the used connecting rods for others. 

The true test, and the only test, is whether the rebab- 
bitting process itself results in the creation of a new 
article, or whether it only accomplishes the restoration of 
an article already created. That is the test which can 
be applied to every rebabbitter and will result in abso- 
lute equality and uniformity of administration of the 
taxing statute. 

In City of Louisville v. Zinmeister (Ky.), 222 S. W. 
958, 1. c. 959, the Supreme Court of Kentucky said : 

"In the recent case of Lorrilard Co. v. Ross, Sheriff, 
183 Ky. 217, 209 S. W. 39, we held that the word 
'manufacture', in the sense in which it is employed 
in the statutes quoted above, does not import the 



—28— 

means or methods employed, or the nature or number 
of processes resorted to, or the size of the factory 
or the number of hands it employs, or the value of 
machinery in use, but the result accomplished, whether 
the article is manufactured or not." 

It is elementary that taxing statutes are to be con- 
strued strictly in favor of the taxpayer. This means that 
the tax must be based upon express statutory authority 
and cannot be imposed by implication. In Hartranft v. 
Wiegmann, 121 U. S. 609, it is said in the opinion by 
Mr. Justice Blatchford, at page 616: 

"We are of the opinion that the decision of the 
Circuit Court was correct. But, if the question were 
one of doubt, the doubt would be resolved in favor 
of the importer, 'as duties are never imposed on a 
citizen upon vague or doubtful interpretations'. 
Powers v. Barney, 5 Blatchf. 202; United States v. 

I sham, 84 U. S., 17 Wall. 496, 504; Gurr v. Scudds, 

II Exch. 190, 191; Adams v. Bancroft, 3 Sumn. 
384." 

In Miller v. Standard Nut Margarine Co., 284 U. S. 
498, it is stated in the opinion by Mr. Justice Butler, at 
page 508: 

"It is elementary that tax laws are to be inter- 
preted liberally in favor of taxpayers and that words 
defining things to be taxed may not be extended be- 
yond their clear import. Doubts must be resolved 
against the government and in favor of taxpayers. 
United States v. Merriam, 263 U. S. 179, 188, 29 
A. L. R. 1547, 44 S. Ct. 69; Bowers v. Nezv York & 
A. Lighterage Co., 27 Z U. S. 346, 350, 47 S. Ct. 
398." 



—29— 

In Erskine v. United States (C. C. A. 9), 84 Fed. (2d) 
690, 691, it is said: 

"Such revenue acts must be construed strictly in 
favor of the appellant sought to be charged as im- 
porter. He is 'entitled to the benefit of even a doubt.' 
Tariff Act 1897, 30 Stat. 151 ; United States v. Riggs, 
203 U. S. 136, 1939, 27 S. Ct. 39, 40, 51 L. Ed. 127; 
Hartranft v. Wiegmann, 121 U. S. 609, 616, 7 S. 
Ct. 1240, 30 L. Ed. 1012; Miller v. Standard Nut 
Margarine Co., 284 U. S. 498, 508, 52 S. Ct. 260, 
76 L. Ed. 422." 

In Bankers Trust Co. v. Bowers (C. C. A. 2), 295 
Fed. 89, 96, it is said that the construction placed on a 
statute should avoid unjust consequences unless the act 
compels such a result. This is particularly true of a tax- 
ing statute where absolute uniformity and equality are 
to be preserved. 

In Alaska Consolidated Canneries v. Territory of Al- 
aska (C. C. A. 9), 16 Fed. (2d) 256, 1. c. 258, it is said 
in the opinion by Rudkin, C. J. : 

"Of course there is a presumption that laws, and 
especially tax laws, will have a prospective operation 
only; but there is a like presumption that they are 
intended to operate uniformly and equally upon all 
and, in the end, the question is one of legislative in- 
tent/' 

The contention of the Government that some distinc- 
tion may be made predicated upon the fact that the appel- 
lee is a large operator would seem to be specifically 
refuted by the case of Spreckels Sugar Refining Co. v. 
McClain (C. C. A. 3), 113 Fed. 244, opinion by Circuit 
Judge Dallas. In that case the statute imposed an excise 



—30— 

tax on all gross receipts in excess of the sum of 
$250,000.00 per annum. A monthly return was required 
by the law, which did not specifically require anything but 
an annual payment of tax. The Spreckels Company filed 
a return for the first month, showing receipts in excess of 
the sum of $250,000.00, and it was contended that the 
law should be construed so as to force the company to 
pay the tax monthly. The court held that the construc- 
tion of the act contended for by the Government was "so 
questionable as to render it inadmissible to impose a duty 
upon a citizen", citing the Hartranft case, and further 
held that such an inequality in the administration of the 
law could not be imposed upon the plaintiff simply because 
the returns were so large that its first monthly return 
exceeded $250,000.00. The court said in the opinion, 
1. c. 247: 

"We have already pointed out that it is not neces- 
sary to put an interpretation upon this section which 
might involve such inequality in its administration 
and, except by necessity, no such interpretation could 
be justified." 

Thus it can be seen that the court weighed the very 
points which are here urged by the appellant and specific- 
ally decided that large size of the plant, number of em- 
ployees and magnitude of operations would not constitute 
the test of the application of the statute. 

It is a cardinal principle of tax law that any doubt 
shall be resolved against the taxing authority. To do 
otherwise in this action would be to work great hardship 
upon the appellee and controvert all established law on 
that point. 



—31— 

The Bureau of Internal Revenue has no authority to 
attempt to amend any congressional act or extend the 
meaning thereof by regulation. This principle is clearly 
pointed out by the Supreme Court in Koshland v. Hel- 
vering, 298 U. S. 441, 446; Manhattan General Equip- 
ment Co. v. Commissioner, 297 U. S. 129, 134. 

Had Congress intended the tax herein involved to at- 
tach to the sale of repaired automobile parts such pro- 
vision would have been put in the Internal Revenue Act 
of 1932. Failure to put such provision in that act 
shows clearly that it intended for the tax to attach to 
the sale of only newly-manufactured parts. 

Appellee respectfully submits that, in the public inter- 
est, as well as to prevent injustice to this appellee, the 
judgment of the learned trial court should be sustained 
to the end that fairness, equality and uniformity in the 
administration and collection of federal manufacturer's 
excise tax shall be insured. 

Conclusion. 

It is submitted that the evidence supports the findings 
of fact, conclusions of law and opinion of the trial court, 
and that the judgment should be affirmed. 

Respectfully submitted, 

Darius F. Johnson and 
Meserve, Mumper & Hughes, 

Attorneys for Appellee. 



APPENDIX. 

Revenue Act of 1932, c. 209, 47 Stat. 169: 

Sec. 606. Tax on Automobiles, etc. 

There is hereby imposed upon the following articles sold 
by the manufacturer, producer, or importer, a tax equiva- 
lent to the following percentages of the price for which 
so sold : 



(c) Parts or accessories (other than tires and inner 
tubes) for any of the articles enumerated in subsections 
(a) or (b), 2 per centum. * * * 

Treasury Regulations 46, approved June 18, 1932: 

Art. 4. Who is a manufacturer or producer. — As used 
in the Act, the term "producer" includes a person who 
produces a taxable article by processing, manipulating, 
or changing the form of an article, or produces a taxable 
article by combining or assembling two or more articles. 



No. 9746. 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



United States of America, 

Appellant, 



vs. 



J. Leslie Morris Company, Inc., a corporation, 

Appellee. 



PETITION FOR REHEARING ON BEHALF OF 
THE APPELLEE, J. LESLIE MORRIS COM- 
PANY, INC., A CORPORATION. 



Darius F. Johnson, 
1124 Van Nuys Building, Los Angeles, 

Meserve, Mumper and Hughes, 
615 Richfield Building, Los Angeles, 

Attorneys for Appellee. 



I 



Parker & Baird Company, Law Printer*, Lea jAfffle^ i" ttaCSif: *>* 

OLEItk 



TOPICAL INDEX. 



PAGE 



I. 

The decision is in conflict with the law, the statute and decisions 
of the Supreme Court and Circuit Court of Appeals for 
other circuits 1 

II. 

Treasury Regulations 46, Article 4, approved June 18, 1932, 
regulating taxation of automobile parts and accessories, under 
paragraph 606(c) of the Revenue Act of 1932, does not pur- 
port to levy a tax on the sale of rebabbitted automobile con- 
necting rods 8 

Conclusion 10 

Certificate of counsel 10 



TABLE OF AUTHORITIES CITED. 

Cases. page 

American Fruit Growers, Inc. v. Brogdex, 283 U. S. 1 7 

Anheuser-Busch Brewing Association v. U. S., 207 U. S. 556 
5, 7 

Cadwalader v. Jessup & Moore, 149 U. S. 350 1 

Clawson & Bals v. Harrison, 108 Fed. (2d) 991 9 

Ely Norris Safe Company v. Mosler Safe Co., 62 Fed. (2d) 

524 7 

Foglesong Machinery Company v. J. D. Randall Company, 237 

Fed. 893 7 

Goodyear Shoe Machinery Company v. Jackson, 112 Fed. 146.... 7 

Hartranft v. Wiegmann, 121 U. S. 609 ...2, 7 

Hess-Bright Mfg. Co. v. Bearing Co., 271 Fed. 350 7 

Thurman, Collector v. Swisshelm, 36 Fed. (2d) 350 9 

Regulations. 

Treasury Regulations 46, Art. 4 8 



No. 9746. 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



United States of America, 

Appellant, 
vs. 
J. Leslie Morris Company, Inc., a corporation, 

Appellee. 



PETITION FOR REHEARING ON BEHALF OF 
THE APPELLEE, J. LESLIE MORRIS COM- 
PANY, INC., A CORPORATION. 



To the Honorable Circuit Court of Appeals for the Ninth 
Circuit: 

Appellee J. Leslie Morris Company, Inc., a corporation, 
respectfully petitions for a rehearing of this appeal and 
urges the court to reconsider its decision in this case for 
the following reasons and upon the following grounds: 

I. 
The Decision Is in Conflict With the Law, the Statute 
and Decisions of the Supreme Court and Circuit 
Court of Appeals for Other Circuits. 

The Supreme Court of the United States has announced 
in its decision in the case of Cadwaladcr v. Jessup & 
Moore, 149 U. S. 350: 

'The uncontradicted testimony is to the effect that 
the only commercial use or value of the old india 



— 2— 

rubber shoes, or scrap rubber, or rubber scrap in 
question, is by reason of the india rubber contained 
therein, as a substitute for crude rubber ; that the old 
shoes were of commercial use and value only by rea- 
son of the india rubber they contained, as a substitute 
for crude rubber, and not by reason of any prepara- 
tion or manufacture which they had undergone; that 
they could not fairly be called 'articles composed of 
india rubber/ and as such dutiable at 25 per centum 
ad valorem; and that, although the shoes may have 
been originally manufactured articles composed of in- 
dia rubber, they lost their commercial value as such 
articles, and substantially were merely the material 
called 'crude rubber.' They were not fabrics or india 
rubber shoes, because they had lost substantially their 
commercial value as such." (Italics supplied.) 

It is respectfully submitted that the connecting rods 
which are the subject under discussion in the instant case 
had a value far in excess of their value as raw material 
because of the manufacturing processes they had previ- 
ously undergone. Under the rule established by the above 
case it is essential that the only value be that of raw 
material. That if the value of the article results from the 
manufacturing process previously undergone, then the 
value is because of that manufacturing process, and not as 
raw material. The record indicates that the appellee 
herein paid from $1.60 to $1.90 for each connecting rod, 
which was far in excess of the junk or raw material value. 
[R. 124.] 

Appellee cites Hartranft v. Wiegmann, 121 U. S. 609, 
as an additional authority on the question of who is a 
manufacturer and what is manufacturing. The issue in 
that case concerned the rate of duty to be levied upon 
certain shells depending upon whether they were or were 



not "manufactured." The question involved and the 
facts are stated in the opinion of Mr. Justice Blatchford, 
as follows, 1 C. 613-14: 

"The question is whether cleaning off the outer 
layer of the shell by acid, and then grinding off the 
second layer by an emery wheel, so as to expose the 
brilliant inner layer is a manufacture of the shell, the 
object of these manipulations being simply for the 
purpose of ornament, and some of the shells being 
afterwards etched by acids, so as to produce inscrip- 
tions upon them. It appears that these shells in ques- 
tion were to be sold for ornaments, and that shells of 
these descriptions have also a use to be made into but- 
tons and handles of penknives; and that there is no 
difference in name and use between the shells ground 
on the emery wheel and those not ground. It is con- 
tended by the government that the shells prepared by 
the mechanical or chemical means stated in the rec- 
ord, for ultimate use, are shells manufactured, or 
manufactures of shells, within the meaning of the 
statute." 

The conclusion of the court and the reasoning support- 
ing it are set forth in the following excerpt from the 
opinion 1. c. 615 : 

"We are of the opinion that the shells in question 
here were not manufactured, and were not manufac- 
tures of shells, within the sense of the statute impos- 
ing a duty of 35 per centum upon such manufac- 
tures, but were shells not manufactured, and fell 
under that designation in the free list. They are still 
shells. They had not been manufactured into a new 
and different article, having a distinctive name, char- 
acter or use from that of a shell. The application of 



— 4— 

labor to an article, either by hand or by mechanism, 
does not make the article necesarily a manufactured 
article, within the meaning of that term as used in 
the tariff laws. Washing and scouring wool does not 
make the resulting wool a manufacture of wool. 
Cleaning and ginning cotton does not make the re- 
sulting cotton a manufacture of cotton. In 'Schedule 
M' of Section 2504 of the Revised Statutes, page 475, 
2nd Edition, a duty of 30 per cent ad valorem is im- 
posed on 'coral cut or manufactured'; and in Section 
2505, page 484, 'coral marine, unmanufactured', is 
exempt from duty. These provisions clearly imply 
that, but for the special provisions imposing a duty 
on cut coral, it would not be regarded as a manufac- 
tured article, although labor was employed in cutting 
it. In Frazee v. Moffit, 20 Blatchf . 267, it was held 
that hay pressed in bales, ready for market, was not 
a manufactured article, although labor had been be- 
stowed in cutting and drying the grass and baling 
the hay. In Lawrence v. Allen, 48 U. S. 7 How. 
785, it was held that india rubber shoes, made in 
Brazil, by simply allowing the sap of the india rubber 
tree to harden upon a mold, were a manufactured 
article, because it was capable of use in that shape as 
a shoe, and had been put into a new form, capable 
of use and designed to be used in such new form. In 
United States v. Potts, 9 U. S. 5 Cranch 284, round 
copper plates turned up and raised at the edges from 
four to five inches by the application of labor, to fit 
them for subsequent use in the manufacture of cop- 
per vessels, but which were still bought by the pound 
as copper for use in making copper vessels, were held 
not to be manufactured copper. In the case of 
United States v. Wilson, 1 Hunt's Merchants' 
Magazine 167, Judge Betts held that marble which 
had been cut into blocks for the convenience of trans- 



— 5— 

portation was not manufactured marble, but was free 
from duty, as being unmanufactured. 

"We are of the opinion that the decision of the 
circuit court was correct. But, if the question were 
one of doubt ,the doubt would be resolved in favor of 
the importer, 'as duties are never imposed on citizens 
upon vague or doubtful interpretations.' Powers v. 
Barney, 5 Blatchf. 202; U. S. v. Isham, 84 U. S., 17 
Wall. 496, 504; Gurr v. Scudds, 11 Exch. 190, 191; 
Adams v. Bancroft, 3 Sumn. 384." (Italics sup- 
plied.) 

The third case cited is Anheuser-Busch Brewing Asso- 
ciation v. U. S., 207 U. S. 556, in which the plaintiff sued 
to recover certain import duties which it paid on corks 
designed for use in bottling beer. 

Under the act there involved plaintiff was required to 
prove as the basis of its refund or "drawback" that the 
corks involved were not manufactured corks but merely 
materials imported to be used in the manufacture of corks 
in the United States. The evidence showed that the corks 
imported into this country from Spain had already 
been cut by hand to the required size. It was further 
shown that in such condition, however, they were not 
suitable for use in bottling beer because they would not 
retain the gas in the bottle and because they would im- 
part a cork taste to the beer, thereby making it unmarket- 
able and unfit for use. After importation, however, the 
corks were subjected in the brewing company's plant to 
various processes and treatment consuming several days 
of time, during which the corks were treated, processed, 



sealed and coated so as to render them useful for the in- 
tended purpose. The court found that the process to 
which the corks were subject did not constitute manufac- 
ture; that the corks were manufactured before they were 
imported and that the brewing company was not entitled 
to its refund. In the opinion by Mr. Justice McKenna 
it is said, 1. c. 559: 

"The corks in question were, after their importa- 
tion, subject to a special treatment which, it is con- 
tended, caused them to be articles manufactured in 
the United States of 'imported materials' within the 
meaning- of Section 25. The Court of Claims decided 
against the contention and dismissed the petition. 41 
Ct CI. 389. 

"The treatment to which the corks were subjected 
is detailed in Finding 3, inserted in the margin. 

"In opposition to the judgment of the Court of 
Claims counsel have submitted many definitions of 
'manufacture/ both as a noun and a verb, which, 
however applicable to the cases in which they were 
used, would be, we think, extended too far if made 
to cover the treatment detailed in Finding 3 or to the 
corks after the treatment. The words of the statute 
are indeed so familiar in use and meaning that they 
are confused by attempts at definition. Their first 
sense as used is fabrication or composition — a new 
article is produced of which the imported material 
constitutes an ingredient or part. When we go fur- 
ther than this in explanation, we are involved in re- 
finements and in impractical niceties. Manufacture 



— 7— 

implies a change, but every change is not manufac- 
ture, and yet every change in an article is the result 
of treatment, labor, and manipulation. But some- 
thing more is necessary, as set forth and illustrated 
in Hartranft v. Wiegmann, 121 U. S. 609, 7 Sup. 
Ct. Rep. 1240. There must be transformation; a 
new and different article must emerge, 'having a dis- 
tinctive name, character or use.' This cannot be said 
of the corks in question. A cork put through the 
claimant's process is still a cork." (Italics supplied.) 

Appellee contends that the preceding cases are directly 
in point and are authority supporting the contention that 
said appellee is not a manufacturer. Under the rule laid 
down in Hartranft v. Wiegmann and Anheuser-Busch 
Brewing Association v. U. S., supra, it is necessary that 
a new and different article of commerce emerge in order 
for "manufacturing" to exist. 

In defining the meaning of words used in statutes im- 
posing excise taxes it is always the practice of the courts 
to look to other cases, including cases arising under the 
tariff and patent laws for guidance. In this regard the 
petitioner herein also relies on American Fruit Growers, 
Inc. v. Brogdex, 283 U. S. 1 ; Goodyear Shoe Machinery 
Company v. Jackson, 112 Fed. 146 (CCA. 1, 1901); 
Foglesong Machinery Company v. J. D. Randall Com- 
pany, 237 Fed. 893 (CCA. 6, 1917); Ely Norris Safe 
Company v. M osier Safe Co., 62 Fed. (2d) 524 (CCA. 
2, 1933) ; and II ess-Bright Mfg. Co. v. Bearing Co., 271 
Fed. 350 (D. C Pa., 1921). 



II. 

Treasury Regulations 46, Article 4, Approved June 18, 
1932, Regulating Taxation of Automobile Parts 
and Accessories, Under Paragraph 606(c) of the 
Revenue Act of 1932, Does Not Purport to Levy a 
Tax on the Sale of Rebabbitted Automobile Con- 
necting Rods. 

Regulations 46, Article 4, was adopted for the purpose 
of clarifying the Revenue Act of 1932. Otherwise it would 
be claimed that certain operations which in themselves in- 
volved no manufacturing whatever, were not subject to 
the act, even though automobile parts or accessories were 
produced. For instance, it would be possible to purchase 
various items which are not taxable and assemble them 
into automobile parts or accessories and sell them tax free 
because there was no manufacturing. However, there was 
certainly production, and the person so combining or as- 
sembling them would certainly be a producer. 

It is conceded by the appellant that there is no tax on 
immediate repairs. However, this Honorable Court holds 
that because of the fact that appellee operates on a large 
scale, places quantities of rebabbitted connecting rods in 
stock and sells them under the trade name "Moroloy" and 
issues cataogues, that it is a "manufacturer or producer." 
This places an undue burden on this petitioner because of 
the size of its operations and the service it is prepared 
to render. 

Even though this petitioner conceded, which it does not, 
that the above regulations had the force and effect of law, 
they would be too vague and incomplete to impose a tax 
upon the operations of appellee. This Honorable Court is 
well aware of the rule that literal interpretations can be 
insisted on in resistance to taxing statutes. 



This Honorable Court places great emphasis on Claw- 
son & Bals v. Harrison (CCA. 7), 108 Fed. (2d) 991, 
in reaching its conclusions herein. However, that case 
differed in many respects from the instant case, notably in 
that Clawson & Bals were manufacturers of new connect- 
ing rods in addition to being rebabbitters. They com- 
mingled new and rebabbitted connecting rods and sold 
them all as C & B rods, making no difference in guaranty, 
cataloging or pricing. The purchasers had no way of 
telling if they were getting entirely new connecting rods 
or rebabbitted ones. Under the circumstances there exist- 
ing the court could not reach any other conclusion than 
that they were manufacturers. It is conceded that had 
this appellee forged new connecting rods or contracted 
with a foundry for their forging, that it would rightly be 
classed as a manufacturer. However, that was not the 
case. Ninety-five per cent of the connecting rods rebab- 
bitted by appellee were received from wholesale automobile 
parts jobbers in exchange for rebabbitted rods of the iden- 
tical type. The remaining five per cent were purchased 
from new car dealers and dealers in used parts. [R. 
119-120.] 

Petitioner cites Thurman, Collector v. Swisshelm (C 
C A. 7), 36 Fed. (2d) 350. The principles underlying 
the Swisshelm case do not differ from the instant case. 
Swisshelm commenced his process with an automobile, 
compeltely manufactured and tax paid by the manufac- 
turer; the plaintiff in this case commenced its work with 
connecting rods previously manufactured and tax paid by 
the manufacturer. When Swisshelm finished his process, 
he still had an automobile — he had created nothing new; 
when appellee herein completed the rebabbitting process, it 
still had connecting rods — it had created nothing new. 



—10— 

There is no evidence in the record to sustain the court's 
statement that the connecting rods rebabbitted by appellee 
had been discarded prior to acquisition by appellee. In 
fact the record indicates that the rods had been carefully 
saved by the wholesale automobile parts jobbers and sent 
to appellee so that they might be rebabbitted and thereby 
restored to their original condition of usefulness. 

Conclusion. 

By reason of the fact that the question involved herein 
is of grave importance to not only the appellee, but also to 
many other companies throughout the United States en- 
gaged in the same business, and because certain misunder- 
standings have already arisen wherein some of them 
claim not to be affected by the decision because their oper- 
ations differ somewhat from those detailed in the opinion 
and findings of the trial court, it is respectfully submitted 
that this Honorable Court grant a rehearing of this ap- 
peal in order that the full import of the decisions of the 
Supreme Court and Circuit Courts of Appeals involving 
patent and tariff laws may be applied by this Honorable 
Court in its decision of this appeal. 

Respectfully submitted, 

Darius F. Johnson and 
Meserve, Mumper and Hughes, 

Attorneys for Appellee. 

Certificate of Counsel. 

I, Darius F. Johnson, of counsel for the above appellee, 
do hereby certify that the foregoing petition for rehearing 
of this cause is presented in good faith and not interposed 
for the purpose of delay. 

Darius F. Johnson. 



No. 9779 



Unite* States 

Circuit Court of Appeals 



Jfor Hjc jeuntf) Circuit. 



FANCHON & MARCO, INC., a Corporation, 

Appellant, 
vs. 

HAGENBECK- WALLACE SHOWS COMPANY, 
a Corporation, 

Appellee. 



®ran*crtpt of EecnrJ 



Upon Appeal from the District Court of the United 
States for the Southern District of California, 
Central Division .^ 

FILED 



1941 



•Lsnc 



PARKER PRINTING COMPANY. 848 SANSOliE STREET. SAN FRANCISCO 



No. 9779 



Hmteb States; 

Circuit Court of appeals 

Jfor tfje Jlmtft Circuit. 



FANCHON & MARCO, INC., a Corporation, 

Appellant, 

vs. 

HAGENBECK- WALLACE SHOWS COMPANY, 
a Corporation, 

Appellee. 



Qfratticriipt of llkcorb 



Upon Appeal from the District Court of the 

United States for the Southern District 

of California, Central Division. 



PARKER PRINTING COMPANY. S4B SANSOME STREET. SAN FRANCISCO 



INDEX 

[Clerk's Note: When deemed likely to be of an important nature, 
errors or doubtful matters appearing in the original certified record are 
printed literally in italic; and, likewise, cancelled matter appearing in 
the original certified record is printed and cancelled herein accordingly. 
When possible, an omission from the text is indicated by printing in 
italic the two words between which the omission seems to occur.] 

Page 

Answer to Complaint 14 

Appeal : 

Bond on „ _ 49 

Designation of Contents of Record on 
Amended (District Court) 54 

Designation of Contents of Record on, Ap- 
pellant's (Circuit Court of Appeals) 287 

Designation of Contents of Record on, Ap- 
pellee's (Circuit Court of Appeals) 291 

Designation of Contents of Record on (Dis- 
trict Court) 52 

Order Extending Time to File Record on 55 

Statement of Points on _ 286 

Stipulation re Exhibits 1 to 13 294 

Attorneys, Names and Addresses of 1 

Bond on Appeal „.„ 49 

Certificate of Clerk to Transcript of Record 55 

Certificate of Pre-trial Hearing 36 

Complaint 2 

Counterclaim 22 



ii Fanchon & Marco, Inc., vs. 

Index Page 

Counterclaim, Amended 28 

Decision 39 

Designation of Contents of Record on Appeal, 
Amended (District Court) 54 

Designation of Contents of Record on Appeal, 
Appellant's (Circuit Court of Appeals) 287 

Designation of Contents of Record on Appeal, 
Appellee's (Circuit Court of Appeals) 291 

Designation of Contents of Record on Appeal 
(District Court) 52 

Findings of Fact and Conclusions of Law 39 

(also see Pre-trial Certificate, page 36) 

Judgment ~ 46 

Names and Addresses of Attorneys of Record... 1 

Notice of Appeal 48 

Order Extending Time to File Record on Ap- 
peal 55 

Order on Pre-trial Rule 16 35 

Pre-trial Certificate 36 

Pre-trial Order „ .._ 35 

Reply to Amended Counterclaim 32 

Reply to Counterclaim 26 

Statement of Points on Appeal 286 

Stipulation re Exhibits 1 to 13 ..„ 294 



Hagenbeck-Wallace Shows Co. iii 

Index Page 

Testimony 56 

Exhibits for defendant: 

1 — Agreement dated May 11, 1939 
between Fanchon & Marco, Inc., 
and Glendale Post #127, Ltd 250 

2 — Agreement dated May 4, 1939, 
between Fanchon & Marco, Inc. 
and Long Beach Pyramid No. 43, 

A. E. O. S 255 

3— Agreement dated May 27, 1939, 
between Fanchon and Marco, Inc. 
and Napa Post 113, American Le- 
gion 255 

4— Agreement dated May 29, 1939, 
between Fanchon & Marco, Inc. 
and American Legion Post #13 255 

5 — Agreement dated May 19, 1939, 
between Fanchon & Marco, Inc. 
and Charles Roe Post #30 of the 
American Legion 255 

6— Agreement dated May 29, 1939, 
between Fanchon and Marco, Inc. 
and Oakland American Legion 
Committee 256 

7 — Agreement dated May , 1939, 

between Fanchon & Marco, Inc. 
and Santa Ana Lodge #794 

B. P. 0. E 256 



iv Fanchon & Marco, Inc., vs. 

Index Page 

Exhibits for defendant (Cont.) : 

8— Agreement dated May 29, 3939, 
between Fanchon & Marco, Inc. 
and William J. Quinn 256 

9 — Agreement dated May 16, 1939, 
between Fanchon and Marco, Inc. 
and Santa Monica Cities Post 123, 
American Legion 256 

10--Agreement dated May 18, 1939, 
between Fanchon & Marco, Inc. 
and Ventura Lodge #1430 
B. P. O. E. Elks 256 

11 — Agreement dated May 6, 1939, 
between Fanchon & Marco, Inc. 
and D. M. Price 257 

12 — Agreement dated May 6, 1939, 
between Fanchon & Marco, Inc. 
and Inglewood Council of Parents 
and Teachers 257 

13— Agreement dated May 2, 1939, 
between Fanchon & Marco, Inc. 
and Bakersfield, California Lodge 
No. 266 B. P. O. Elks _ - 257 

14 — Telegram sent to various sponsors 
from Fanchon & Marco, Inc. (May 
31, 1939) 258 

15 — Telegram from Ralph J. Claw- 
son to John Singling North 163 



Hagenbeck-Wallace Shows Co. v 

Index Page 

Exhibits for defendant (Cont.) : 

16 — Statement of settlement made by 

defendant with sponsors, etc 178 

17 — Bills for repairs on railroad cars 

from Santa Fe R. R. to defendant 194 

Exhibits for plaintiff: 

A-l — List of wagons - - 82 

A-2— Letter dated June 28, 1939 to 
Mr. Marco of Fanchon & Marco 
from Paul Eagles 112 

Witnesses for defendant: 
Cunningham, Charles E. 

—direct 238 

— cross _ 240 

Daillard, Wayne 

— direct 172 

Ducey, Ted 

—direct 219 

Guice, Walter S. 

— direct 247 

— cross 248 

— recross 249 

Hackett, Mrs. Patty 

— direct 167 

— cross ~ 170 

Hall, Glenn 

— direct .... 176 

— cross „ 178 



vi Fanchon & Marco, Inc., vs. 

Index Page 

Witnesses for defendant (Cont.) : 

Kettring, R. V. 

—direct - 190 

— cross 218 

Kline, Tiny 

—direct 171 

Kramer, Jack W. 

—direct - 233 

Priest, Charles H., Jr. 

— direct 241 

Wolff, Marco 

— direct „ 163 

— cross 166 

Witnesses for plaintiff: 

Austin, J. V. 

—direct 223 

— cross 230 

Clawson, Ralph J. 

—direct „ „ 136 

— cross 158 

Eagles, Paul 

— direct 63 

— cross 101 

— redirect 108 

— recross 113 

— redirect 114 



Hagenbeck-Wallace Shotvs Co. vii 

Index Page 

Witnesses for plaintiff (Cont.) : 
Graham, Patrick 

—direct 274 

—cross 282 

Nelson, Charles W. 

— direct 114 

Nelson, Charles W. 

—direct 285 

Pennock, Murray 

—direct 259 

— cross 264 

Singleton, George 

— direct _ 120 



NAMES AND ADDRESSES OF ATTORNEYS 

For Appellant: 

MESSRS. MACFARLANE, SCHAEFER, 

HAUN & MULFORD, 
HENRY SCHAEFER, JR., Esq., 
JAMES H. ARTHUR, Esq., 
WILLIAM GAMBLE, Esq., 

1150 Subway Terminal Building, 

Los Angeles, California. 

For Appellee : 

MESSRS. COMBS & MURPHINE, 
LEE COMBS, Esq., 
THOMAS F. MURPHINE, Esq., 
JOHN F. REDDY, Esq., 

925 Pacific Southwest Building, 

Los Angeles, California. [1*] 



•Page numbering appearing at foot of page of original certified 
Transcript of Record. 



2 Fcmchon & Marco, Inc., vs. 

In the United States District Court in and for the 
Southern District of California, Central Division 

No. 658— M Civil 

HAGENBECK- WALLACE SHOWS COMPANY, 

a Corporation, 

Plaintiff, 

'VS. 

FANCHON & MARCO, INC., a Corporation, 

Defendant. 

COMPLAINT 

For Damages for Breach of Contract 
Comes now plaintiff and for cause of action com- 
plains and alleges as follows : 

I. 

That plaintiff is a corporation duly organized and 
existing under and by virtue of the laws of the State 
of Indiana, authorized and licensed to do business 
in the State of California; that defendant is a cor- 
poration, duly organized and existing under and by 
virtue of the laws of the State of California, auth- 
orized and licensed to do business and doing busi- 
ness in the County of Los Angeles, State of Cali- 
fornia. 

II. 

That plaintiff is a corporation incorporated un- 
der the laws of the State of Indiana and defendant 
is a corporation incorporated under the laws of the 
State of California ; that the matter in controversy 



Hagenbeck-Wallace Shows Co. 3 

herein exceeds, exclusive of interest and costs, the 
sum of Three Thousand ($3000.00) Dollars. 

III. 

That on the 22nd day of May, 1939, plaintiff and 
defendant entered into a written contract, the terms 
of which are more particularly set forth in Exhibit 
"A" attached hereto and made a part hereof as if 
set forth verbatim herein. [2] 1 

IV. 

That plaintiff has at all times done and performed 
all of the stipulations, conditions and agreements 
stated in said contract to be performed on its part 
at the time and in the manner therein specified; 
that in connection therewith on the 23rd day of 
May, 1939 at its own expense, plaintiff delivered 
from Baldwin Park, California, and turned over 
to defendant all of the property described in Para- 
graph 1 of Exhibit "A" attached hereto, in good 
condition, ready for use, at the City of Inglewood, 
State of California; that defendant at said time 
accepted said property and thereafter commenced 
the operation of "The Great American Circus" 
throughout the State of California as in said con- 
tract provided; that thereafter on or about May 
31, 1939, defendant returned said property to the 
grounds of plaintiff at Baldwin Park, California, 
and refused to further continue operation of "The 
Great American Circus"; that plaintiff made every 
endeavor during the remainder of the term of said 
contract, to let said property to others but was un- 



4 Fanckon & Marco, Inc., vs. 

able so to do; that plaintiff fed and cared for the 
animals and equipment for a period of four (4) 
weeks at a cost to plaintiff of Four Hundred 
($400.00) Dollars per week or a total of Sixteen 
Hundred ($1600.00) Dollars. 

V. 

That defendant has failed and refused and still 
fails and refuses to perform said contract on its side, 
and in particular in connection therewith has failed 
and refused to pay in cash on delivery of said prop- 
erty to defendant at Inglewood, California, the sum 
of Twenty-five Hundred ($2500.00) Dollars, and 
failed to deliver the four certain promissory notes 
referred to in Paragraph V of said Exhibit "A" 
attached hereto, at the time and place stated in said 
contract as required for the delivery thereof, to- 
wit, Inglewood, California, on the 23rd day of May, 
1939. [3] 

VI. 

That by reason of the default of defendant in the 
terms and conditions of the contract and agreement 
by and between the parties hereto, plaintiff has been 
damaged in the sum of $12,809.14 comprising the 
sum of $2500.00 cash due and unpaid on the 23rd 
day of May, 1939, together with interest thereon at 
the rate of 7% from the 23rd day of May, 1939, to 
and until the date of the filing of this suit, being the 
sum of $2,569.02 ; the sum of $2500.00 due and pay- 
able on the 31st day of May, 1939, together with in- 
terest thereon at the rate of 7% to and until the 
date of the filing of this suit, being the sum of $2,- 



Hagenbeck-Wallace Shows Co. 5 

565.13 ; the sum of $2500.00 due and payable on the 
7th day of June, 1939, together with interest thereon 
at the rate of 7% per annum to and until the date 
of the filing of this suit, being the sum of $2,561.73 ; 
the sum of $2500.00 due and payable on the 14th 
day of June, 1939, together with interest thereon 
at the rate of 7% to and until the date of the filing 
of this suit, being the sum of $2,558.33 ; and the sum 
of $2500.00 due and payable on the 21st day of June, 
1939, together with interest thereon at the rate of 
7% to and until the date of the filing of this suit, 
being the sum of $2,554.93; and the sum of $66.00 
paid by plaintiff herein for defendant for insur- 
ance, as particularly provided under the terms and 
conditions of paragraph 12 of Exhibit "A" attached 
hereto. 

VII. 

That although repeated demand has been made 
for the payment of the sums of money due plaintiff 
under the terms and conditions of its contract with 
defendant herein, as particularly set forth herein- 
before, no part thereof has been paid and the whole 
thereof is past due, owing and unpaid. 

For a second, separate and distinct cause of ac- 
tion, plaintiff herein complains and alleges as fol- 
lows : 

I. 

Realleges and restates all the allegations con- 
tained in [4] Paragraph I to VII inclusive of its 
First Cause of Action, and makes the same a part 
hereof as if set forth verbatim herein. 



6 Fanchon & Marco, Inc., vs. 

II. 

That within two years last past, defendant was 
indebted to the plaintiff in the sum of $15,475.14 
for rentals due by defendant to plaintiff and for 
monies advanced by plaintiff for and on behalf of 
defendant; being so indebted, the defendant in con- 
sideration thereof then and there promised the plain- 
tiff to pay it the said sum of money on request. 

III. 

That the defendant although requested, has not 
paid the same or any part thereof to the plaintiff, 
but refuses to do so. 

For a Third, separate and distinct cause of action, 
plaintiff herein complains and alleges as follows: 

I. 

Realleges and restates all the allegations con- 
tained in Paragraphs I to VII inclusive of its First 
Cause of Action, and makes the same a part hereof 
as if set forth verbatim herein. 

II. 

That within two years last past defendant was in- 
debted to the plaintiff in the sum of $15,475.14 upon 
an open book account, and being so indebted defend- 
ant in consideration thereof then and there agreed 
and promised plaintiff to pay it the said sum of 
money on request. 

III. 

That defendant though requested, has not paid 
the same or any part thereof to the plaintiff, but re- 
fuses to do so. 



Hagenbeck-W allace Shows Co. 7 

Wherefore, plaintiff prays judgment against de- 
fendant for the sum of $15,475.14, with interest as 
allowed by law, for costs of suit, and for such fur- 
ther relief as to the Court seems meet and just. 

COMBS & MURPHINE, 
By LEE COMBS, 

Attorneys for Plaintiff. [5] 

State of California, 
County of Los Angeles — ss. 

Lee Combs, being by me first duly sworn, deposes 
and says: that he is one of the attorneys for plain- 
tiff in the above entitled action; that he has read 
the foregoing Complaint — for damages for breach 
of contract and knows the contents thereof; and 
that the same is true of his own knowledge, except 
as to the matters which are therein stated upon his 
information or belief, and as to those matters that 
he believes it be true that the reason why said Com- 
plaint is not verified by an officer of plaintiff cor- 
poration is that its place of business is in the State 
of Indiana and that none of its officers are now 
within the County of Los Angeles, State of Califor- 
nia, where affiant resides. 

LEE COMBS. 

Subscribed and sworn to before me this 10 day 
of November, 1939. 

(Seal) JESSIE WOODRUFF, 

Notary Public in and for the County of Los An- 
geles, State of California. [6] 



8 Fanckon <& Marco, Inc., vs. 

EXHIBIT "A" 

Agreement made this 22 day of May, 1939 be- 
tween The Hagenbeck- Wallace Shows Company, a 
corporation organized and existing under the laws 
of Indiana, hereinafter referred to as " Lessor' ' and 
Fanchon & Marco, Inc., a corporation organized and 
existing under the laws of California, hereinafter 
referred to as " Lessee", 

Witnesseth : 

1. The Lessor hereby leases to the Lessee, and 
the Lessee hereby hires from the Lessor the follow- 
ing property: 

One circus train consisting of seven flat cars, 
two stock cars, two coaches and two sleepers; 
big top seats, ring curbs; rails; chandeliers; 
ticket boxes; one air caliope; blocks, falls and 
cables; one public address system; cash regis- 
ters; one concession department complete with 
stands, counters, etc.; twenty circus wagons; 
stake drivers, howdahs ; complete wardrobe for 
animals and performers ; reserved seats for big 
top including chairs and blue plank seats for 
end sections; side show platforms; one 25 kilo- 
watt light plant and booster on wagon; ten ele- 
phants, twelve ponies, six dogs (collies), one 
bucking mule, four camels, and one orangou- 
tang, together with harness and trappings for 
the animals, 

all of which property is now stored and quartered 
at Baldwin Park, California. 



Hagenheck-Wallace Shows Co. 9 

2. This lease is for a term of five weeks begin- 
ning May 24, 1939, with an option to the Lessee to 
renew the same at the end of said term of five weeks 
for successive periods of one week each, but not to 
extend beyond August 16, 1939, upon the same terms 
and conditions as herein stated. Said option shall 
be exercised by the Lessee by giving written notice 
thereof, either by letter or telegram, addressed to 
the Lessor, during the last week of said term of five 
weeks and during each week thereafter. 

3. The Lessor shall, at its own expense, deliver 
all of the foregoing property, in good condition and 
ready for use, to the Lessee at Inglewood, Califor- 
nia, by May 23, 1939. 

4. The said property shall be used by the Lessee 
in connection with its operation of a circus under 
the name of "The Great American Circus" and for 
no other purpose. Such use thereof is hereby re- 
stricted to the State of California and none of said 
[7] property shall be removed from or used outside 
of the State of California without the Lessor's writ- 
ten consent thereto being first given. 

5. The rental for said term of five weeks begin- 
ning May 24, 1939 shall be $12,500 which shall be 
paid as follows: $2,500 in cash on the delivery of 
said property to the Lessee at Inglewood, Califor- 
nia, and $10,000 by the delivery to the Lessor at the 
same time of the Lessee's four promissory notes, 
each for $2,500, the first of said four notes to be 
payable May 31, 1939, the second note to be payable 
June 7, 1939, the third note to be payable June 14, 



10 Fanchon & Marco, Inc., vs. 

1939, and the fourth note to be payable June 21, 
1939. All of said notes shall be payable at the main 
office of the Bank of America at Los Angeles, Cali- 
fornia. In the event that the Lessee shall exercise 
its option to renew this lease, the Lessee shall pay 
to the Lessor each week for the use of said property 
the sum of $2,500 in cash for each and every week 
of such renewal, until the property shall have been 
returned by the Lessee. 

6. If default shall occur in the punctual payment 
of any of said promissory notes, or in payment of 
any other obligation of the Lessee hereunder, or in 
the performance of any of the conditions herein on 
the part of the Lessee to be performed, all of the 
said promissory notes, without previous notice or 
demand, shall, at the option of the Lessor, become 
and be immediately due and payable, and the Lessor 
shall have the right immediately to terminate this 
lease, and thereupon said lease shall be at an end 
as fully as if it had expired by limitation, and the 
Lessor shall have the right to enter upon the prem- 
ises where said property or any of it is stored or 
kept and take possession thereof and of every part 
thereof, by force or otherwise, without being liable 
to prosecution or damages therefor, and shall have 
the right to retain all payments and promissory 
notes which up to that time may have been made and 
delivered under any of the provisions of this agree- 
ment. j[8J 

7. The Lessor warrants that all of the said prop- 
erty is free and clear of liens, encumbrances or valid 
claims of ownership of any person or persons what- 



Hagenbeck-Wallace Shows Go. 11 

soever, and that it has full power and right to lease 
the same. 

8. .. Tho Lqdooq hao oxaminod the oaid proporty 
4tnd tho Loqbop ■ makca no representation as tc ita- 
condition ' or fitness for the uqo thoroof ■ intondod ' by 
the Looacc. [WPD JP.] 

9. All increase of animals by birth shall be and 
remain the property of the Lessor. 

10. The Lessee hereby assumes all risks in the 
use and operation of the said property and will hold 
the Lessor harmless from any and all claims arising 
out of or by reason of the Lessee 's use and operation 
of said property. 

11. The Lessee shall take good care of all of said 
property and shall provide all necessary veterinarian 
services and medicines for the animals. At the ex- 
piration of this lease the Lessee shall, at its own 
expense, return and deliver to the Lessor, at Bald- 
win Park, California, all of the said property, as 
well as any increase thereof, in the same condition 
in which it was delivered by the Lessor, reasonable 
wear and tear excepted. 

12. The Lessor agrees to procure a policy or 
policies of insurance in the amount of $30,000 to 
cover the said property against the risks of fire, 
lightning, collision or derailment of railroad cars, 
overturning of trucks or wagons and stranding, 
sinking, burning or collision with another vessel 
while on ferries or in cars on transfers in connec- 
tion therewith, for a period of four months, and 
the Lessee agrees to pay to the Lessor, upon de- 
mand, the amount of the premium charged for such 
insurance but not to exceed three hundred dollars. 



12 Fanchon & Marco, Inc., vs. 

In the event that the Lessee shall not use the prop- 
erty hereby leased for said period of four months, 
the Lessor shall, after the Lessee shall have returned 
all of said property to the Lessor at Baldwin Park, 
California, relinquish to the Lessee all [9] interest 
in the said policy so that the Lessee may recover the 
unearned premium thereon. 

13. The Lessor and its agents shall at all times 
have the right to enter upon any premises occupied 
by the Lessee for the purpose of inspecting and ex- 
amining the property hereby leased. 

14. The Lessee shall not assign this agreement 
or sublet the said property or any portion thereof. 

15. Within one week from the date hereof, the 
Lessee will, at its own expense, deliver to the Lessor 
k bond of a surety company, satisfactory to the 
Lessor, in the sum of $30,000 conditioned upon the 
return by the Lessee to the Lessor, at the expira- 
tion of this lease, of all of the property hereby 
leased, as well as any increase thereof, in the same 
condition in which it was delivered by the Lessor, 
reasonable wear and tear excepted. 

In Witness whereof, the parties have caused their 
respective corporate seals to be affixed and these 
presents to be executed by their respective corpo- 
rate officers, the day and year first above written. 
(Seal Affixed) THE HAGENBECK- WAL- 

LACE SHOW COMPANY, 
(Signed) By W. P. DUNN, JR., 

Sect'y & Treas. 
(Seal Affixed) FANCHON & MARCO, 

INC., 
(Signed) By J. A. PARTINGTON, 

President. [10] 



Hagenbeck-Wallace Shows Co. IS 

State of New York, 
County of New York, 
City of New York — ss. 

On the 22nd day of May, 1939, before me came 
W. P. Dunn, Jr., to me known, who, being by me 
duly sworn, did depose and say that he resides at 
311 Gregory Ave., West Orange, N. J., that he is 
Secy.-Treas. of The Hagenbeck-Wallace Shows 
Company, the corporation described in, and which 
executed, the foregoing instrument; that he knows 
the seal of said corporation; that the seal affixed 
to said instrument is such corporate seal; that it 
was affixed by order of the Board of Directors of 
said corporation and that he signed his name thereto 
by like order. 

(Signed) SAMUEL SHAYON, 

Notary Public. 

Commission expires March 30, 1940. 

State of New York, 
County of New York, 
City of New York — ss. 

On the 22nd day of May, 1939, before me Jack A. 
Partington, to me known, who, being by me duly 
sworn, did depose and say that he resides at 400 
Park Ave., N. Y., that he is the President of Fan- 
chon & Marco, Inc., the corporation described in, 
and which executed, the foregoing instrument; that 
he knows the seal of said corporation; that the seal 
affixed to said instrument is such corporate seal; 
that it was so affixed by order of the Board of Di- 



14 Fanchon & Marco, Inc., vs. 

rectors of said corporation, and that he signed his 
name thereto by like order. 

(Signed) SAMUEL SHAYON, 

Notary Public. 
Commission expires March 30, 1940. 
[Endorsed] : Piled Nov. 10, 1939. [11] 



[Title of District Court and Cause.] 

ANSWER 

In defense of plaintiff's claim (designated causes 
of action in plaintiff's complaint), defendant al- 
leges : 

First Defense 

The complaint fails to state a claim against de- 
fendant upon which relief can be granted. 

Second Defense 
Defendant admits the allegations contained in 
paragraphs I, II, and III; and denies each and 
every other allegation in the complaint, except that 
in paragraph I of plaintiff's Second and Third 
Claim, defendant admits the paragraphs realleged 
from plaintiff's First Claim which defendant here- 
tofore admitted. 

Third Defense 
I. 
That the consent of this defendant to the making, 
entering into and execution of that certain agree- 
ment referred to in the complaint dated the 22nd 



Hagenbeck-Wallace Shows Co. 15 

day of May, 1939, a copy of which is attached to the 
complaint marked " Exhibit A", was not free, and 
the apparent consent of this defendant thereto was 
obtained through and by means of actual fraud on 
the part of said plaintiff. 

II. 

That the actual fraud on the part of said plain- 
tiff by [12] which the apparent consent of this de- 
fendant to said contract was obtained, consisted in 
the following acts committed by the plaintiff with 
intent to deceive this defendant, and to induce it to 
enter into said contract, to-wit : 

(a) That said plaintiff knowing that defendant 
intended to use immediately all of the equipment 
described in said contract for and in connection with 
the operation of a circus, under the name of the 
Great American Circus, and knowing that the de- 
fendant had entered into certain written contracts 
with various parties for the performance of said 
circus in various places, suppressed from the de- 
fendant information or knowledge that said equip- 
ment was not in good condition and ready for use 
for the purpose for which intended as aforesaid, 
and that certain of said equipment was not avail- 
able for delivery to the defendant, and that other 
portions were incomplete, the said plaintiff did then 
and there have knowledge or belief of the fact that 
said equipment was not in good condition and ready 
for use, and some of which was not available for 
delivery and some of which was incomplete, and 



If F miction & Marco, Inc., vs. 

(b) Said plaintiff in said contract promised and 
agreed 

"The Lessor shall, at its own expense, deliver 
all of the foregoing property, in good condition 
and ready for use, to the Lessee at Inglewood, 
California, by May 23, 1939." 

and said promise was so made by the plaintiff with- 
out any intention of performing it. 

III. 

That the actual fraud on the part of plaintiff, as 
herein alleged, was perpetrated by said plaintiff 
with the intent and for the purpose of deceiving 
this defendant, and of inducing this defendant to 
enter into the said contract and transactions. That 
the defendant relied upon the acts and fraudulent 
misrepresentations of the plaintiff herein alleged, 
and in reliance thereon consented to and entered into 
and executed the said contract. That the said [13] 
equipment was not in fact in good condition and 
ready for use, but was defective, badly in need of 
repair and reconditioning, and was deficient, and 
certain parts thereof were missing, and other parts 
were incomplete, in the following particulars: 

15 wagons were in need of complete overhaul- 
ing, having flat wheels, bad wheel boxings, bent 
axles and many wagons were without brakes, 
making operation extremely difficult and dan- 
gerous ; 

Tent rigging, blocks, falls, chairs, all unsafe 
and constituting a great hazard to the public 
and employees; 



Hagenbeck-Wallace Shows Co. 17 

Train flat decks and runs in unusable con- 
dition ; 

The calliope broken down and entirely unfit 
for use; 

The elephant howdahs, either not in plain- 
tiff's possession or unfit for use and conse- 
quently never delivered ; 

"Wardrobe incomplete, and that which was 
delivered in bad condition and much of it un- 
usable ; 

Sleeping cars without blankets, sheets, berth 
curtains or pillow cases. 

That had the defendant known of the defective 
character of said equipment, and that much of said 
equipment was incomplete and large portions en- 
tirely missing, as herein alleged, it would not have 
entered into said contract. 

IV. 

That on or about the 31st day of May, 1939, and 
after this defendant had obtained possession of part 
of the equipment described in said contract, and at- 
tempted to use the same, this defendant for the first 
time learned and discovered the permanent defec- 
tive character of certain equipment and of its need 
of repair and reconditioning, as herein set forth, 
and did thereupon redeliver all of said equipment 
to the plaintiff and gave written notice to the plain- 
tiff of its rescission of said contract, a copy of which 
written notice of rescission is attached hereto 
marked " Exhibit A", and made a part hereof. [14] 



18 Fanchon & Marco, Inc., vs. 

Fourth Defense 
I. 
That after the making and execution of the con- 
tract referred to in plaintiff's complaint, a copy of 
which is attached thereto, marked " Exhibit A" and 
made a part thereof, the consideration for the ob- 
ligation of this defendant under said contract failed 
in whole or in part through the fault of the plain- 
tiff. 

II. 
That the failure of consideration for the obliga- 
tion of this defendant consisted in the following: 

That under the terms of said contract the plain- 
tiff, designated therein as Lessor, covenanted and 
agreed as follows: 

"The Lessor shall, at its own expense, deliver 
all of the foregoing property, in good condition 
and ready for use, to the Lessee at Inglewood, 
California, by May 23, 1939.' ' 

That said plaintiff knew at the time of the execu- 
tion of said contract that defendant contemplated 
the immediate use of said equipment for the pur- 
pose of the conduct and operation of a circus, un- 
der the name of the Great American Circus, and 
that it had obligated itself by written contract with 
various sponsors to immediately produce the cir- 
cus. That the said plaintiff did not deliver all of 
the said equipment, described in said contract with 
this defendant, and that which was delivered was 
not in good condition and ready for use by May 23, 
1939, in that the said equipment was defective, badly 



Hagenbech-Wallace Shows Co. IS 

in need of repair and reconditioning, and in par- 
ticular the following deficiencies existed : 

15 wagons were in need of complete over- 
hauling, having flat wheels, bad wheel boxings, 
bent axles and many wagons were without 
brakes, making operation extremely difficult 
and dangerous; 

Tent rigging, blocks, falls, chairs, all unsafe 
and constituting a great hazard to the public 
and employees; 

Train flat decks and runs in unusable con- 
dition; [15] 

The calliope broken down and entirely unfit 
for use ; 

The elephant howdahs, either not in plain- 
tiff's possession or unfit for use and conse- 
quently never delivered; 

Wardrobe incomplete, and that which was de- 
livered in bad condition and much of it unus- 
able; 

Sleeping cars without blankets, sheets, berth 
curtains or pillow cases. 

III. 

That shortly after taking possession of said equip- 
ment, the defendant for the first time ascertained 
the defective character of the equipment and the 
fact that it was not in good condition and ready 
for use, in the particulars hereinabove set forth, 
and that certain of said equipment was missing, 
and did thereupon on or about May 31, 1939, rede- 



20 Fcmchon & Marco, Inc., vs. 

liver all of said equipment to the plaintiff and gave 
to the plaintiff written notice of its rescission of 
said contract of May 22, 1939, a copy of said writ- 
ten notice of rescission being hereto attached, 
marked " Exhibit A", and made a part hereof. 

IV. 

That the failure of consideration for the obliga- 
tion of this defendant was occasioned wholly by and 
through the fault of the plaintiff, and plaintiff could 
have prevented said failure of consideration by dili- 
gently correcting the defects in said equipment, re- 
pairing and reconditioning the same and placing it 
in good condition and ready for use, and by supply- 
ing such equipment as was missing. 

Fifth Defense 

I. 

That at the time of the making and execution of 
the contract referred to in plaintiff's complaint, a 
copy of which is attached thereto marked " Exhibit 
A", defendant informed plaintiff that it proposed 
to use the equipment described in said contract in 
the immediate production of a circus, under the 
name of the [16] Great American Circus, and that 
it had made contracts and proposed to make ad- 
ditional contracts with sponsors on whose behalf 
it would produce such circuses, and that the same 
would be used for such purposes during the period 
of said contract, and that such hiring of said equip- 
ment under the terms of said contract was for such 
purposes. 



Hagenbeck-Wallace Shows Co. 21 

II. 

That the said plaintiff failed and refused to put 
the equipment, described in said contract, in a con- 
dition fit for the purpose for which it was let by 
plaintiff to defendant, and in particular failed to 
correct defects, and items requiring repair in the 
following particulars : 

15 wagons were in need of complete overhaul- 
ing, having flat wheels, bad wheel boxings, bent 
axles and many wagons were without brakes, 
making operation extremely difficult and dan- 
gerous ; 

Tent rigging, blocks, falls, chairs, all unsafe 
and constituting a great hazard to the public 
and employees; 

Train flat decks and runs in unusable condi- 
tion; 

The calliope broken down and entirely unfit 
for use; 

The elephant howdahs, either not in plain- 
tiff's possession or unfit for use and conse- 
quently never delivered ; 

Wardrobe incomplete, and that which was 
delivered in bad condition and much of it un- 
usable ; 

Sleeping cars without blankets, sheets, berth 
curtains or pillow cases. 

III. 

That the defects and deteriorations herein de- 
scribed were not occasioned by the fault of this de- 



22 Fanchon & Marco, Inc., vs. 

fendant, and were not the result of the natural use 
by this defendant, but said defects existed at the 
time of the delivery of said equipment by the plan- 
tiff to the defendant. [17] 

COUNTERCLAIM 

I. 

That plaintiff and defendant entered into a writ- 
ten contract, a copy of which is attached to plain- 
tiff's complaint and marked " Exhibit A". That by 
the terms of said contract, defendant agreed to 
lease from plaintiff for an agreed rent, certain 
equipment which was to be used by the defendant 
for the express purpose of conducting a circus. That 
the plaintiff agreed to deliver said equipment to de- 
fendant in good condition and ready for use. 

II. 

That plaintiff failed and refused to comply with 
the terms of said agreement in that the said equip- 
ment was not in good condition, but was wholly in- 
adequate for the purpose intended to be made 
thereof by the defendant as contemplated by the 
contract, and that the plaintiff failed and refused to 
deliver all of the equipment as specified in said 
contract. 

III. 

That because of the failure of the plaintiff to 
comply with the covenants contained in said con- 



Hagenbeck-Wallace Shows Co. 23 

tract, the defendant was unable to operate the circus 
as contemplated by the parties. That the equipment 
was in such a dangerous condition that it was 
hazardous for the employees to use said equipment, 
and to the members of the public who were in at- 
tendance upon performances wherein the said equip- 
ment was used. That because of such deficiencies 
and because of the condition of the equipment it be- 
came necessary for defendant to discontinue the 
operation of the circus, whereupon defendant re- 
delivered all of said equipment theretofore delivered 
to it to the plaintiff ; and defendant was, therefore, 
wholly deprived of any use or benefit from the sub- 
ject matter of said contract and was prevented from 
complying with its terms. 

IV. 

That in reliance upon plaintiff's performance and 
with [18] the knowledge of plaintiff, defendant 
entered into certain written contracts with third 
parties wherein defendant agreed to produce a 
circus which was to be sponsored by said third 
parties. That because of plaintiff's breach as afore- 
said, defendant was prevented from performing said 
contracts and became liable in damages to said third 
parties in amounts as yet not fully ascertained. That 
when said amount of damages are ascertained, de- 
fendant will respectfully ask leave of court to 
amend it's counterclaim to insert the same. 



24 Fanchon & Marco, Inc., vs. 

VI. 

That due to the condition of the equipment as 
aforesaid, it was necessary for defendant to expend 
the sum of Two Thousand Five Hundred Dollars 
($2,500.00) for repairs and replacements of missing 
articles which plaintiff agreed to furnish. That all 
of the repairs made by defendant were not at- 
tributable to ordinary wear and tear, but were made 
in an attempt to put said equipment in a good and 
usable condition. 

VII. 

That by reason of plaintiff's breach in failing and 
refusing to comply with the terms of the agreement 
as aforesaid, defendant has been damaged to the ex- 
tent of Fifty Thousand Dollars ($50,000.00) as loss 
of profits from the operation and use of the equip- 
ment as agreed to be furnished by plaintiff. 

Wherefore, defendant demands: 

1. That plaintiff be awarded no relief under its 
complaint ; 

2. That defendant have judgment in the sum of 
Fifty-Two Thousand Five Hundred Dollars ($52,- 
500.00), and such further damages as may be 
ascertained ; 

3. It's costs in said action. 

MacFARLANE, SCHAEFER, 
HAUN & MULFORD 
By HENRY SCHAEFER, JR., and 
JAMES H. ARTHUR, and 
WILLIAM GAMBLE, 
Attorneys for defendant. [19]' 



Hagenbeck-Wallace Shows Co. 25 

" EXHIBIT A" 

NOTICE OF RESCISSION 

To: Hagenbeck-Wallace Shows Company, 
a corporation 

You Will Please Take Notice that the under- 
signed, Fanchon & Marco, Inc., a corporation, 
hereby rescinds and terminates that certain agree- 
ment of lease entered into between the said under- 
signed and you on the 22nd day of May, 1939, 
wherein and whereby certain circus equipment 
therein described was purportedly leased to the 
undersigned by you. 

This rescission is made on the ground that the 
consideration for this obligation has failed in a ma- 
terial respect, and particularly because the equip- 
ment set forth in said lease agreement was not at 
the time of the delivery of said equipment to the 
Lessee, or now, in proper form or order to use in 
the manner for which it was intended to be used, 
and such use up to date has been had only by the 
expenditure of large sums of money by the Lessee ; 
said defects being as follows: 

15 wagons being in need of complete overhauling, 
having flat wheels, bad wheel boxings, bent axles and 
many wagons without brakes, thus making opera- 
tion extremely difficult and dangerous; 

Tent rigging, blocks, falls, chairs, all unsafe and 
constituting a great hazard to the public; 

Train flat decks and runs in unusable condition; 

In addition the Calliope does not operate; 

Elephant howdahs never delivered ; 



26 Fanchon & Marco, Inc., vs. 

Wardrobe incomplete, and that which was de- 
livered was in bad condition; 

Sleeping cars without blankets, sheets, berth cur- 
tains or pillow cases. 

These items and others have caused delays, re- 
sulting in losses estimated to be $6000.00, and in re- 
pairs spent to date in excess of $2000.00, and caus- 
ing the Lessee to become liable to suits for unful- 
filled contracts. 

The Lessee herewith tenders and returns to you 
all the equipment that it has procured delivered at 
your premises. 

Yours truly, 
FANCHON & MARCO, INC. 
By J. A. PARTINGTON 

President 

[Endorsed]: Piled Dec. 7, 1939. [20] 



[Title of District Court and Cause.] 

REPLY TO COUNTERCLAIM 

Plaintiff for its reply to the counterclaim con- 
tained in defendant's Answer to the Complaint 
herein, says: 

First Defense 

I. 

Plaintiff admits the allegations contained in 
Paragraph I of defendant's counterclaim. 



Hagenbeck-Wallace Shows Co. 27 

II. 

That plaintiff has no knowledge or information 
sufficient to form a belief concerning the allegation 
contained in Paragraphs IV and VI of defendant's 
counterclaim. 

III. 

Plaintiff denies each and every allegation con- 
tained in Paragraphs II and III and VII of de- 
fendant's counterclaim, except that in Paragraph 
III of defendant's counterclaim plaintiff admits 
that said equipment was redelivered to plaintiff 
herein on or about the 31st day of May, 1939. 

Second Defense 

I. 

That said counterclaim fails to state facts suf- 
ficient to constitute a counterclaim against plaintiff 
upon which relief can be granted. [21] 

Third Defense 

I. 

That defendant is estopped from maintaining this 
counterclaim by reason of its conduct in itself being 
in default upon a dependent and concurrent obliga- 
tion, in that defendant failed and refused to make 
payment of $2500.00 upon delivery of said equip- 
ment as provided for in the contract, and further 
failed and refused to deliver any of the notes as in 
said contract provided. 



28 Fcmchon & Marco, Inc., vs. 

Fourth Defense 

I. 

That defendant is estopped from maintaining this 
counterclaim for damages for repair by reason of 
its conduct in not giving plaintiff such notice as re- 
quired by Section 1957 of the Civil Code of Cali- 
fornia. 

Fifth Defense 

I. 

That defendant is estopped from maintaining this 
counterclaim for damages for breach of said con- 
tract by reason of its conduct in rescinding and ter- 
minating said contract in writing, as set out in the 
Third Defense of defendant's Answer as Ex- 
hibit "A", on file herein. 

Wherefore, plaintiff demands that defendant be 
awarded no relief under its counterclaim and 
that plaintiff have judgment as prayed for in its 
complaint. 

COMBS & MURPHINE 
By THOS. F. MURPHINE, 

Attorneys for plaintiff. 

[Endorsed] : Filed Dec. 19, 1939. [22] 



[Title of District Court and Cause.] 

AMENDED COUNTERCLAIM 

Now comes the defendant, Fanchon & Marco, Inc., 
and by leave of Court first had, files this its 
Amended Counterclaim, and alleges as follows : 



Hagenbeck-Wallace Shows Co. 29 

I. 

That plaintiff and defendant entered into a 
written contract, a copy of which is attached to 
plaintiff's complaint and marked " Exhibit A". 
That by the terms of said contract, defendant agreed 
to lease from plaintiff for an agreed rent, certain 
equipment which was to be used by the defendant 
for the express purpose of conducting a circus. That 
the plaintiff agreed to deliver said equipment to 
defendant in good condition and ready for use. 

II. 

That plaintiff failed and refused to comply with 
the terms of said agreement in that the said equip- 
ment was not in good condition, but was wholly in- 
adequate for the purpose intended to be made 
thereof by the defendant as contemplated by the 
contract, and that the plaintiff failed and refused 
to deliver all of the equipment as specified in said 
contract. 

III. 

That because of the failure of the plaintiff to com- 
ply with the covenants contained in said contract, 
the defendant was [23] unable to operate the circus 
as contemplated by the parties. That the equipment 
was in such a dangerous condition that it was 
hazardous for the employees to use said equipment, 
and to the members of the public who were in at- 
tendance upon performances wherein the said equip- 
ment was used. That because of such deficiencies and 
because of the condition of the equipment it became 



30 Fanchon & Marco, Inc., vs. 

necessary for defendant to discontinue the opera- 
tion of the circus, whereupon defendant redelivered 
all of said equipment theretofore delivered to it to 
the plaintiff; and defendant was, therefore, wholly 
deprived of any use or benefit from the subject 
matter of said contract and was prevented from 
complying with its terms. 

IV. 

That in reliance upon plaintiff's performance and 
with the knowledge of plaintiff, defendant entered 
into certain written contracts with third parties 
wherein defendant agreed to produce a circus which 
was to be sponsored by said third parties. That be- 
cause of plaintiff's breach as aforesaid, defendant 
was prevented from performing said contracts and 
became liable in damages to said third parties in 
amounts as yet not fully ascertained. That when 
said amount of damages are ascertained, defendant 
will respectfully ask leave of court to amend it's 
counterclaim to insert the same. 

V. 

That immediately upon discovering that the equip- 
ment furnished by the plaintiff was not in good con- 
dition and ready for use in compliance with the 
terms of the contract between the plaintiff and de- 
fendant, the defendant notified the plaintiff that 
said equipment was not in good condition and ready 
for use and specified the particulars wherein said 
deficiencies and need of repairs in said equipment 



Hagenbeck-Wallace Shows Co. 31 

existed. That thereupon the defendant was informed 
by the plaintiff, through its agents, that the defend- 
ant should assume to make such repairs and addi- 
tions as were necessary to restore the equipment in 
such a condition as to comply with the [24] terms 
of the contract. That thereupon this defendant pro- 
ceeded to make necessary repairs and additions to 
said equipment and expended therefor the sum of 
Two Thousand Five Hundred Dollars ($2,500.00). 
That although defendant expended the sum as afore- 
said, it was impossible for this defendant to restore 
the equipment in a condition suitable for use for the 
purpose for which it was intended, and that it was 
necessary in consequence that defendant return said 
equipment and rescind the contract as hereinbefore 
alleged. 

VI. 
That by reason of plaintiff's breach in failing and 
refusing to comply with the terms of the agreement 
as aforesaid, defendant has been damaged to the 
extent of Fifty Thousand Dollars ($50,000.00) as 
loss of profits from the operation and use of the 
equipment as agreed to be furnished by plaintiff. 

Wherefore, defendant demands : 

1. That plaintiff be awarded no relief under its 
complaint ; 

2. That defendant have judgment in the sum of 
Fifty-Two Thousand Five Hundred Dollars ($52,- 
500.00), and such further damages as may be ascer- 
tained ; 



32 Fanchon & Marco, Inc., vs. 

3. It's costs in said action. 

MacFARLANE, SCHAEFER, 
HAUN & MULFORD 
By HENRY SCHAEFER, JR. and 
JAMES H. ARTHUR and 
WILLIAM GAMBLE, 
Attorneys for defendant. 

[Endorsed]: Filed Nov. 23, 1940. [25]' 



[Title of District Court and Cause.] 

REPLY TO AMENDED COUNTERCLAIM 

Plaintiff for its reply to the amended counter- 
claim contained in defendant's amended counter- 
claim on file herein, says: 

First Defense 

I. 

Plaintiff admits each and several the allegations 
contained in Paragraph I of the amended counter- 
claim. 

II. 

Denies each and several all the allegations con- 
tained in Paragraphs II, III and IV of said 
amended counterclaim, excepting that this plaintiff 
admits that defendant deposited and left at Baldwin 
Park, California, on or about June 1st, 1939, all of 
the equipment referred to in Exhibit "A" attached 
to plaintiff's complaint on file herein. 



Hageribeck-WaUace Shows Co. 33 

III. 
Answering Paragraph V, this plaintiff admits 
that certain minor repairs were made by plaintiff 
on said equipment; admits that certain minor re- 
pairs were made by defendant on said equipment 
with the understanding that plaintiff reimburse for 
same; alleges that all of said repairs were of a 
minor nature ; deny each and several all the remain- 
ing allegations in said Paragraph V contained. 

IV. 

Denies each and several all the allegations con- 
tained in Paragraph VI of said amended counter- 
claim. [26] 

Second Defense 

I. 

That said amended counterclaim fails to state 
facts sufficient to constitute a counterclaim against 
plaintiff upon which relief can be granted. 

Third Defense 

I. 

That defendant is estopped from maintaining this 
counterclaim by reason of its conduct in itself being 
in default upon a dependent and concurrent obliga- 
tion, in that defendant failed and refused to make 
payment of $2500.00 upon delivery of said equip- 
ment as provided for in the contract, and further 
failed and refused to deliver any of the notes as in 
said contract provided. 



34 Fanchon & Marco, Inc., vs. 

Fourth Defense 

I. 

That defendant is estopped from maintaining this 
amended counterclaim for damages for repair by 
reason of its conduct in not giving plaintiff such 
notice as required by Section 1957 of the Civil Code 
of California. 

Fifth Defense 

I. 

That defendant is estopped from maintaining this 
amended counterclaim for damages for breach of 
said contract by reason of its conduct in rescinding 
and terminating said contract in writing, as set out 
in the Third Defense of defendant's Answer as Ex- 
hibit "A" on file herein. 

Sixth Defense 

I. 

That upon the facts as alleged in said amended 
counterclaim, defendant is not entitled to recover 
$50,000.00 or any sum whatsoever as loss of profits 
from the operation and use of the equipment re- 
ferred to, or otherwise, in connection with the con- 
tract referred [27] to herein or at all, by reason of 
its attempting to stand upon a rescission of the con- 
tract in this case, and that said defendant cannot 
recover both on rescission and on breach of contract. 

Seventh Defense 

I. 

That the equipment referred to in the contract 
set forth in plaintiff's complaint in this action was 



Hagenheck-Wallace Shows Co. 35 

selected, inspected and examined by defendant itself 
before execution of the contract referred to herein 
and the specific items referred to in said contract 
were all known to and examined by defendant be- 
fore execution of the contract, and that said equip- 
ment was accepted in the condition, quantities, 
amounts and description prior to its delivery at 
Inglewood, May 23, 1939. 

Wherefore, plaintiff demands that defendant be 
awarded no relief under its Amended Counterclaim, 
and that plaintiff have judgment as prayed for in 
its complaint. 

COMBS & MURPHINE 
By LEE COMBS 

Attorneys for plaintiff. 

[Endorsed] : Filed Nov. 27, 1940. [28] 



[Title of District Court and Cause.] 

ORDER ON PRETRIAL RULE No. 16. 

Pursuant to citation for Pretrial under Rule 16, 
Lee Combs, Esq., attorney for the plaintiff Haden- 
beck- Wallace Show Company, and Henry Schaefer, 
Esq., attorney for the defendant Fanchon & Marco, 
appeared in the chambers of this Court on this 14th 
day of November, 1940, at 10:30 a. m. 

The Pretrial conference was opened by the under- 
signed Judge, and after discussion of the pleadings 
and the issues, it was stipulated by the attorneys, 
that the contract attached as Exhibit "A" to the 



36 Fcmchon & Marco, Inc., vs. 

plaintiff's complaint was executed; there was sharp 
differences between the attorneys, as to the delivery 
of the property enumeratd in the contract, and of 
the condition of the wagons, tent rigging, blocks, 
falls, chairs, or any of the other property including 
animals, wardrobes, sleeping cars, etc.; and after 
discussion between counsel and the Court, it was 
suggested by the Court, that this was one of the 
cases where it appeared the attorneys and their re- 
spective clients could compromise and settle the dif- 
ference, composing the issue in this case, in a more 
satisfactory way than could the Court, and sug- 
gested to the attorneys that they undertake such 
conference with a view of reaching an amicable 
settlement. The attorneys expressed a willingness to 
undertake a compromise and settlement, and there- 
upon a further hearing was continued until the 18th 
day of November, 1940, at 10 o'clock a. m. at the 
Court's chambers for further Pretrial conference. 

Dated this 14th day of November, 1940. 

JEREMIAH NETERER, 

U. S. District Judge. 

[Endorsed] : Filed Nov. 15, 1940. [29] 



[Title of District Court and Cause.] 
CERTIFICATE OF PRETRIAL HEARING 
UNDER RULE No. 16 

Pursuant to adjournment of Pretrial herein on 
the 14th day of November, 1940, appeared Thomas 



Hagenbeck-Wallace Shows Co. 37 

Murphine, Esq., and Lee Combs, Esq., attorneys for 
the plaintiff Hagenbeck-Wallace Shows Company, a 
corporation, and Henry Schaefer, Esq., Attorney 
for the defendant Fanchon & Marco, Inc., a corpo- 
ration. 

On opening of the conference the attorneys for 
the respective parties announced that they could not 
arrive at a compromise agreement, It was thereupon 
stipulated that the plaintiff is a corporation organ- 
ized under the laws of the state of Indiana and li- 
censed to do business in the State of California ; that 
defendant is organized under the laws of the state 
of California and licensed to do business in said 
state ; that the matter in controversy is in excess ex- 
clusive of interest and costs the sum of $3000.00; 
that on the 22nd day of May, 1939, plaintiff and de- 
fendant entered into a written contract, the terms 
of which is set forth in Exhibit "A" attached to 
plaintiff's complaint; that on the 23rd day of May, 
1939, the plaintiff delivered to the defendant prop- 
erties described in said contract; that on the 31st 
day of May, 1939; the defendant returned said 
property to the plaintiff and a copy of the notice of 
remission attached to the answer was delivered to 
plaintiff and the defendant refused to continue with 
the operation of the Great American Circus; the 
defendant admits that the $2500.00 cash payment- 
provided by the contract was not paid, but contends 
that said sum was expended in rehabilitation of the 
equipment delivered. Defendants admits that in ad- 
dition to the $2500.00 cash payment it agreed to give 



88 Fanchon & Marco, Inc., vs. 

to the defendant four notes of $2500.00 each to be 
paid as alleged in the complaint together with in- 
terest thereon as therein provided ; that demand has 
been made for the payment of the said sums and de- 
mand has been refused. It is agreed that the 2nd 
and 3rd causes of action are predicated upon the 
first and that failure of the first cause of action 
would defect the 2nd and 3rd causes of action ; upon 
this stipulation it is ordered that the [31] 1 2nd and 
3rd causes of action be dismissed. Exception is noted 
to the plaintiff. 

It is agreed that the open issue is the condition of 
the equipment in that the 15 wagons had axefe that 
were bent, and out of line, which caused them to 
burn; that it delayed putting up of the tent and 
caused the defendant to miss performance (i.e.) the 
matinee in San Diego, and at Santa Ana and Pasa- 
dena; the Pasadena engagement was on Memorial 
Day. Delay at Pomona so that the mantmee could 
not begin until 4 o'clock instead of 2 o'clock, which 
in turn delayed the evening performance. The con- 
dition of the rope and lines are an open issue; like- 
wise the missing of the elephant howdahs. 

It is admitted that the sponsors contracts were 
executed by the person purporting to have executed 
the same, being 13 in number marked Exhibits Nos. 
1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and filed with the 
Clerk; that the San Diego contract is in form the 
same as Exhibit "3" and on the same terms. Ex- 
hibits 3, 4, 6, 7 & 8 were executed subsequent to the 
date of the delivery of the equipment at Inglewood; 



Hagenbeck-Wallace Shows Co. 39 

Exhibit "3" on May 27th, and the other four on 
May 29th, 1939; that expense of maintaining the 
animals was $400.00 a week; that the telegram sent 
on May 31st, 1939, marked Exhibit #14 is a copy of 
the telegram sent to the parties listed on Exhibit 
#14 and filed with the Clerk. 

The issue will be limited to the condition of the 
equipment when delivered to the defendant and to 
losses, if any, recoverable that were occasioned by 
the deficiency of the equipment if any. 

This statement to be read in evidence upon the 
trial thereof. 

Dated this 25th day of November, 1940. 
JEREMIAH NETERER, 

U. S. District Judge. 

[Endorsed] : Filed Nov. 25, 1940. [32] 



[Title of District Court and Cause.] 

REPORTER'S TRANSCRIPT OF ORAL 
FINDINGS OF THE COURT. [33] 

Los Angeles, California, 

Friday, November 29, 1940, 1:45 P.M. 

The Court: The court adopts the certificate of 
facts filed in the pre-trial order as a part of the 
court's findings. The court further finds that, be- 
fore executing the contract in issue, Clawson, the 
caretaker of plaintiff's circus at winter quarters 
at Baldwin Park, saw Nelson and one or two other 



40 Fanchon dt Marco, Inc., vs, 

persons as well, and told them that the plaintiff 
would like to let some or all of its circus. Nelson 
took the matter up with the defendant, and there- 
after, on the 22nd day of May, the contract was 
executed in New York by defendant's sponsor and 
the plaintiff pursuant thereto. The property de- 
scribed in the complaint of plaintiff is set forth in 
the contract attached thereto, by which the use 
of the property was leased to the defendant for the 
period of five weeks, at a rental of $2500' per week. 
This property had been used in the show busi- 
ness, some of it for a number of years. The ropes 
had been used for one or two years, perhaps two 
years. The defendant is familiar with the show 
business, and had been in such business for some 
time. He knew about the ropes, and must have 
known how long those ropes would likely continue 
in use. The defendant had in its employ a practi- 
cal staff of efficient showmen, who had been engaged 
in the show business, some for many years. Some 
had been [34] employed by the defendant. Eagles 
and Nelson and Daillard were the defendant's spe- 
cial representatives in selecting, or at least looking 
over the property and paraphernalia for the de- 
fendant's use and the properties of the plaintiff 
at the winter quarters in Baldwin Park. From 
about 48 wagons, 15 wagons were finally selected. 
All of the property that was delivered and accepted 
at Inglewood was in good, usable condition. Some 
of it was in need of some repairs, which the de- 
fendant had made and charged to the plaintiff's 



Hagenbeck-Wallace Shows Co. 41 

account, to be deducted from the first payment due 
the plaintiff. The railroad cars needed repairs to 
bring them within the Interstate Commerce re- 
quirements. These repairs were made to the cars, 
and after reconditioning, the cars were delivered 
at Inglewood. Nelson said all of the property named 
in the complaint was delivered except the how- 
dahs. Nelson, who wtls in the defendant's employ, 
said they did not need the howdahs then, but 
knew where they were, and when needed he would 
get them, and that he, Nelson, w T as advised where 
they were and could receive them when he needed 
them. Eagles likewise was present at the receipt 
of this property, and he said they did not need 
them, and, if needed, knew where to get them. 

All of the property was viewed by the defendant, 
through its agents. Everything was open and ob- 
vious. Nothing was concealed from them. The sleep- 
ing cars were old. They [35] had slat beds. There 
were no springs on the beds. Some of the pillows 
and sheets were gone. No blankets were furnished, 
but these were afterward purchased by defendant 
and charged to the plaintiff. These cars were not 
modern in any sense of the word, but their condi- 
tion w r as fully exposed and known by the defend- 
ant, and the defendant saw the condition that the 
cars were in. A suggestion was made with relation 
to painting the cars, and the cars were painted, at 
plaintiff's cost. Something was said about the cal- 
liope. The calliope was delivered at Inglewood, but 
in unloading there is some testimony that it was 



42 Fanchon & Marco, Inc., vs. 

turned over, and it was afterwards removed to 
some other place by the defendant. There is no 
evidence that the calliope was impaired when it 
w r as delivered at Inglewood. 

Something was said about the runways. The run- 
ways were in good condition. At one place where 
an exhibition was made one of the wagons did 
overturn. The testimony is that the runways should 
have been, or usually are, of steel, now. It is not 
material what the runways are, if they are safe. 
This runway was safe if it w r as supported by the 
under-support. There is no testimony that this run- 
way was placed in the situation which its construc- 
tion required. If the supports had been placed un- 
der it, it perhaps would not have broken, but if the 
runway was sufficient, with the support under it, 
then no complaint could be made. 

The wagons in this case are shown to have been 
heavily [36] loaded, but that is neither here nor 
there. It is not shown that the heavy loading had 
anything to do with it, except that the wagon did 
overturn. I do not find from the evidence that that 
was due to the runway. 

The defendant was advised by Austin, who was 
in its employ in a responsible position, and w T ho was 
an old showman, that it would require at least a 
week or two weeks, I think perhaps he said two 
or three weeks, but a week or two weeks before the 
show would move smoothly and at all satisfactorily. 

The ropes were examined by the defendant's rep- 
resentatives. A coil of 1500 feet w r as bought at In- 



Hagenheck-Wallace Shotvs Co. 43 

glewood by defendant on plaintiff's account. The 
defendant knew the time the ropes had been used. 
There is no evidence as to what use they had been 
placed to or what elements they had been exposed 
to, nor the continuous use to which they had been 
adopted. But all this was known to the defendant 
at the time. 

The rope used at Pasadena broke. This was oc- 
casioned by the rope catching in the block fall, and 
when the tent was sought to be raised, they tried 
to raise it by elephant power, and when it faulted 
and the elephant pulled, the rope broke. This rope 
was then spliced, and was used in raising the tent. 

No part of the broken rope is produced in court 
as evidence, nor is its absence explained. There is 
testimony [37] that the weakness in the rope was 
dry rot, but little weight can be attached to those 
statements, because a rope so afflicted could not be 
detected by a person merely looking at it, as the 
testimony shows these witnesses did. They had no 
special knowledge with relation to it. And the wit- 
ness who spliced the rope testified in this case, but 
he did not say anything about any dry rot or any 
appearance at the broken place of the rope of any 
unusual condition. The non-production of that, of 
course, would indicate the contrary idea to the dry 
rot. 

At the time of the breaking of the rope the man 
who was in charge of that department was an old 
showman. He was working in his line of business 
in making this exhibition. If that had broken be- 
cause of dry rot, he would have discovered it, and 



44 Fanchon & Marco, Inc., vs. 

he would have reported it to the defendant, and a 
part of the rope, or the broken part, would have 
been saved as a matter of protection to the de- 
fendant. But this was not done. 

At Santa Ana the distance from the station to the 
showgrounds w r as three and a half miles. The wag- 
ons were drawn by gas motor power. In moving the 
wagons from the railroad yards to the grounds the 
spindle on the hub of one of the wheels became 
heated. These wagons had been exhibited at Ingle- 
wood and San Diego, and there is no evidence that 
they had been greased or oiled at any time since 
the delivery of the wagons. The wagons were like- 
wise, [38] I will not say overloaded, but they were 
loaded beyond the normal capacity that they usually 
bore. Heat in a spindle, it is common knowledge, 
is caused by friction, and a dry spindle will readily 
heat, but if greased or oiled the friction is elimi- 
nated, and heat will not be created. 

Upon the organization of the show the defendant 
employed a staff of efficient showmen as heads of 
the several departments. The helpers, however, were 
not experienced men. They were what were known 
as green men at the work. They were unfamiliar 
with the business. And changes were made con- 
stantly by persons being in the employ leaving it 
and by taking on new men. 

At Santa Ana the defendant was approached by 
a union labor organizer and asked to sign a closed 
shop contract. He did not do so, but this was post- 
poned, and the request was renewed at Pasadena, 
but it was not signed. The organizer said that if it 



Hagenbeck-W allace Shows Co. 45 

was not signed in Pomona the show could not open 
at San Francisco, as he would call a strike, call 
out the men, that the defendant would not be per- 
mitted to show in San Francisco, where it was 
scheduled to be within a few days. The contract 
was not signed, and the show was closed. 

The defendant then returned the property to the 
place where it had been received and gave notice 
of rescission of the contract. [39] 

The defendant, during the week's performance 
or operation of the show, had a net loss of $23,- 
323.93. 

The conclusion from these facts: When the de- 
fendant accepted the property, after examination 
and after exposition of the property to him, with- 
out discovering any fault of any sort or fashion, 
and assumed to make reconditioning for such needed 
repairs as were apparent, and charged it to the 
plaintiff's account with the plaintiff's consent, he 
waived such reconditioning as is shown to have been 
necessary and to have been made, and may not, 
after operating the show for a week at a loss, as is 
shown, and when threatened with a closed shop 
by the labor unions at Pomona,, and then closing 
the circus, and by his telegram, as is shown by the 
evidence, saying that the show will close because 
of labor conditions, the court cannot now say that 
he has been unfairly dealt with, and the findings 
and judgment will be in favor of the plaintiff, and 
it will recover the amount claimed in the complaint 
except $400 for each week for four weeks animal 
food and except the defendant should be and will 



46 Fanchon & Marco, Inc., vs. 

be given credit for all of the sums which it ex- 
pended upon rehabilitating any part of this show. 
Prom this exhibit which is in the case there should 
be eliminated the rental of stake driver, and gar- 
bage cans and hammer, the truck hire to Ted 
Ducey, dining car equipment, blacksmith equip- 
ment, the 120 yards of burlap, and an item of tools, 
being the next to the last item in this exhibit. You 
can total these items [40] and deduct that from 
the total amount, and you can prepare your decree. 
Unless formal findings are presented, these find- 
ings will be adopted as the court's findings in the 
case 1 . 

JEREMIAH NETERER 
Judge. 

[Endorsed] : Filed Dec. 2, 1940. [41] 



In the United States District Court in and for the 
Southern District of California, Central Divi- 
sion. 

No. 658-M Civil 

HAGENBECK- WALLACE SHOWS COMPANY, 

a corporation, 

vs. 

FANCHON & MARCO, INC., a corporation, 

Defendant. 

JUDGMENT 

Be it remembered that this cause came on regu- 
larly for trial before the Honorable Jeremiah 



Hagenbeck-Wallace Shotvs Co. 47 

Neterer, Judge presiding in the United States Dis- 
trict Court in and for the Southern District, Cen- 
tral Division thereof at Los Angeles, California, 
jury having been waived by the parties hereto. The 
plaintiff Hagenbeck-Wallace Shows Company, a 
corporation appeared being represented by Combs 
and Murphine, Lee Combs, Thos. F. Murphine and 
John F. Reddy, Jr. its attorneys and the defendant 
Fanchon & Marco, Inc., a corporation appeared 
being represented by MacFarlane, Schaefer Haun 
& Mulford by Henry Schaefer Jr. and William 
Gamble its attorneys; the matter was duly and as 
by law provided after due and lawful notice thereof 
on for trial on November 14, 18, 22, 27, 28, 29, 
1940 and evidence both oral and documentary hav- 
ing been presented by both plaintiff and defendant 
and received by the court in the above-entitled 
cause, and arguments of counsel on behalf of both 
of the parties hereto having been made by their 
respective attorneys and the same having been 
heard and considered by the court, and the court- 
having made its findings and stated the same in its 
Certificate of Pretrial Hearing under Rule No. 16 
and in its findings of fact transcribed herein by the 
reporter in the matter and duly adopted and made 
its findings by the court herein, further and other 
findings of fact and conclusions of law having been 
waived by attorneys for the respective parties [42] 
hereto in open court, and the court being fully ad- 
vised in the premises. 



48 Fanchon & Marco, Inc., vs. 

Now there/or it is hereby ordered adjudged and 
decreed that plaintiff Hagenbeck- Wallace Shows 
Company have and recover of defendants Fanchon 
& Marco Inc. the sum of Fifteen Thousand, six 
dollars ($15,006.07) and seven cents together with 
its costs of suit taxed herein in the sum of $356.43 
and the plaintiff have execution therefor. 

Done in open Court this 3rd day of December 
1940. 

JEREMIAH NETERER 

Judge of the United States 
District Court. 
Approved as to form except that no findings are 
waived. 

MacFARLANE, SCHAEFER, 
HAUN & MULFORD 
By HENRY SCHAEFER, JR. 

[Endorsed]: Judgment entered Dec. 3, 1940. 
Docketed Dec. 3, 1940. Book C. O. 4— Page 87. 
R. S. Zimmerman, Clerk. By Theodore Hocke, Dep- 
uty. [43] 



[Title of District Court and Cause.] 

NOTICE OF APPEAL 

To the Clerk of the District Court of the United 
States, in and for the Southern District of 
California, Central Division: 

Notice is hereby given that Fanchon & Marco, 
Inc., defendant above named, hereby appeals to the 



Hagenbeck-Wallace Shows Co. 49 

Circuit Court of Appeals for the Ninth Circuit 
from the final judgment entered in this case on the 
3rd day of December, 1940, and from the Order 
of said Court denying its motion for a new trial. 

Dated: January 13th, 1941. 

MacFARLANE, SCHAEPER, 
HAUN & MULFORD and 
JAMES H. ARTHUR and 
WILLIAM GAMBLE 
By HENRY SCHAEPER, JR. 

Attorneys for Panchon & 

Marco, Inc. 
1150 Subway Terminal Bldg., 
Los Angeles, California. 

Copy of foregoing Notice mailed to Combs & 
Murphine, Esqs., attorneys for plaintiff Jan. 16, 
1941. 

R. S. ZIMMERMAN, 
Clerk. 
By E. L. S., 

Deputy. 

[Endorsed]: Filed Jan. 16, 1941. [44] 



National Automobile Insurance Co. 

[Title of District Court and Cause.] 

SUPERSEDEAS BOND 

Know All Men by These Presents : 

That we, Fanchon & Marco, Inc., a corporation, 
as Principal, and National Automobile Insurance 



50 Fanchon & Marco, Inc., vs. 

Company, a corporation organized and existing 
under and by virtue of the laws of the State of 
California, are held and firmly bound unto Hagen- 
beck-Wallace Shows Company, a corporation, in 
the above entitled suit in the penal sum of Twenty 
Thousand and no/100 Dollars ($20,000.00), to be 
paid to the said Hagenbeck- Wallace Shows Com- 
pany, their successors and assigns, which payment 
well and truly to be made, the National Automobile 
Insurance Company, bind itself, its successors and 
assigns, firmly by these presents. 

Sealed with the corporate seal and dated this 
16th day of January, 1941. 

The condition of the above obligation is such that : 

Whereas, the said Defendant, Fanchon & Marco, 
Inc., a corporation, in the above entitled suit has 
taken an appeal to the United States Circuit Court 
of Appeals for the* Ninth Circuit to reverse a judg- 
ment rendered and entered on the 3rd day of De- 
cember, 1940, by the District Court of the United 
States for the Southern District of California, Cen- 
tral Division, in the above entitled cause : 

Now, Therefore, the condition of this bond is for 
the satisfaction of the judgment in full, together 
with costs, interests and damages for delay if for 
any reason the appeal is dismissed or if the judg- 
ment is affirmed, and to satisfy in full such modi- 
fication of judgment and such costs, interests and 
damages as the appellate court may adjudge and 
award, and in case of default or contumacy on the 



Hagenbeck-Wallace Shows Co. 51 

part of the principal or surety, the Court may, 
upon notice to them of not less than ten days, pro- 
ceed summarily and render judgment against them, 
in accordance with their obligation and award exe- 
cution thereon. 

In Witness Whereof the corporate seal of said 
surety is hereby affixed and attested to by its duly 
authorized Attorney-in-Fact at Los Angeles, Cali- 
fornia, this 16th day of January, 1941. 

[Seal] FANCHON & MARCO, INC., 

a corporation 
By MARCO WOLFF V. P. 

NATIONAL AUTOMOBILE IN- 
SURANCE COMPANY 
By [Seal] R, L. TRAVISS 

Attorney-in-Fact. 

State of California, 
County of Los Angeles — ss. 

On this 16th day of January A. D. 1941, before 
me, Margaret Murphy a Notary Public in and for 
the County and State aforesaid, duly commissioned 
and sworn, personally appeared R. L. Traviss, At- 
torney-in-Fact of the National Automobile Insur- 
ance Company, to me personally known to be the 
individual and officer described in and who exe- 
cuted the within instrument, and he acknowledged 
the same, and being by me duly sworn, deposes and 
says that he is the said officer of the Company 



52 Fanchon & Marco, Inc., vs. 

aforesaid, and the seal affixed to the within instru- 
ment is the corporate seal of said Company, and 
that the said corporate seal and his signature as 
such officer were duly affixed and subscribed to the 
said instrument by the authority and direction of 
the said corporation. 

In Witness Whereof, I have hereunto set my 
hand and affixed my official seal at my office in the 
City of Los Angeles County of Los Angeles the day 
and year first above written. 

[Seal] MARGARET MURPHY 

Notary Public in and for the County of Los An- 
geles, State of California. 

My Commission expires Dec. 23, 1942. 

Examined and recommended for approval as 
provided in Rule 13. 

HENRY SCHAEFER, JR. 
Attorney for Defendant 

I approve the foregoing dated Jan. 16, 1941. 

paul j. Mccormick 

U. S. District Judge. 
[Endorsed] : Filed Jan. 16, 1941. [45] 



[Title of District Court and Cause.] 

DESIGNATION OP RECORD ON APPEAL 

The Appellant herewith files its Designation of 
Record on Appeal and requests that the Clerk in- 



Hagenbeck-Wallace Shows Co. 53 

elude for transmission to the Circuit Court of Ap- 
peals the following: 

Complaint 

Answer and Counter Claim of defendant 

Reply of plaintiff to defendant's counter 
claim 

Amended Counter Claim of defendant 

Eeply of plaintiff to Amended Counter 
Claim 

Order on Pre Trial (filed Nov. 15, 1940) 

Certificate of Pre Trial Hearing (filed Nov. 
25, 1940) 

Order of November 18th, Dismissing Sec- 
ond and Third Cause of action of plaintiff 

Findings of Fact and Conclusions of Law, 
with the direction for the entry of judgment 
thereon — Reporter's trans, pp. 417-424 

Judgment 

Notice of Appeal with date of filing 

Following Exhibits not included in the Or- 
der and Certificate on Pre Trial 

Bills for repairs on Railroad cars from Santa 
Fe Railroad to defendant — photostats 

All of the Reporter's Transcript 

Dated: March 12, 1941. 

MacFARLANE, SCHAEFER, 

HAUN & MULFORD 
JAMES H. ARTHUR and 
WILLIAM GAMBLE 
By HENRY SCHAEFER, JR. 
Attorneys for Defendant 



54 Fanckon & Marco, Inc., vs. 

Received copy of the within Designation this 13 
day of March, 1941. 

COMBS & MURPHINE 
By THOS. F. MURPHINE 

Attorney for Plaintiff. 

[Endorsed] : Filed Mar. 12, 1941. [47] 



[Title of District Court and Cause.] 

AMENDED DESIGNATION OF RECORD ON 

APPEAL 

The Appellant herewith files its Amended Desig- 
nation of Record on Appeal and requests that the 
Clerk include for transmission to the Circuit Court 
of Appeals in addition to the record heretofore 
designated, all the exhibits admitted in evidence in 
said case. 

Dated: March 13, 1941. 

MacFARLANE, SCHAEFER, 

HAUN & MULFORD 
JAMES H. ARTHUR and 
WILLIAM GAMBLE 
By HENRY SCHAEFER, JR. 
Attorneys for Defendant 

Received copy of the within Amended Designa- 
tion of Record on Appeal this 13th day of March, 
1941. 

COMBS & MURPHINE 
Attorneys for Plaintiff. 

[Endorsed] : Filed Mar. 13, 1941. [48] 



Hagenbeck-Wallace Shows Co. 55 

[Title of District Court and Cause.] 

ORDER EXTENDING TIME 

On application of Henry Schaefer, Jr., and good 
cause appearing therefor, 

It is hereby ordered that the time for filing the 
transcript on appeal, and the time in which the 
designation of the contents of the record on appeal 
may be filed, is extended to and including the 7th 
day of April, 1941. 

Dated: February 11th, 1941. 

PAUL J. McCORMICK 

Judge of the District Court 

[Endorsed] : Filed Feb. 11, 1941. [49] 



[Title of District Court and Cause.] 

CERTIFICATE OF CLERK 

I, R. S. Zimmerman, Clerk of the United States 
District Court for the Southern District of Cali- 
fornia, do hereby certify that the foregoing pages, 
numbered 1 to 49, inclusive, contain full, true and 
correct copies of the Complaint; Answer to Com- 
plaint; Reply to Counterclaim; Amended Counter- 
claim; Reply to Amended Counterclaim; Order on 
Pre-trial Rule No. 16; Order Dismissing Second 
and Third Causes of Action; Certificate of Pre- 
trial Hearing; Decision and Findings of Fact and 
Conclusions of Law; Judgment; Notice of Appeal; 
Bond on Appeal; Order for Transmittal of Ex- 



56 F cmchon & Marco, Inc., vs. 

hibits on Appeal; Designation of Contents of Rec- 
ord on Appeal; Amended Designation of Contents 
of Record on Appeal; and Order Extending Time 
to File Record on Appeal ; which, together with the 
original Exhibits and the original Reporter's Tran- 
script, transmitted herewith, constitute the record 
on appeal to the United States Circuit Court of 
Appeals for the Ninth Circuit. 

I do further certify that the Clerk's fee for 
comparing, correcting and certifying the foregoing 
record amounts to $8.70, which fee has been paid to 
me by the Appellant. 

Witness my hand and the seal of said District 
Court, this 28th day of March, A. D., 1941. 
[Seal] R. S. ZIMMERMAN, 

Clerk. 
By EDMUND L. SMITH, 
Deputy Clerk. [50] 



[Title of District Court and Cause.] 

Los Angeles, California, 
Wednesday, November 27, 1940 

TESTIMONY 

Mr. Combs: In connection with the amended 
counterclaim, although we are not certain that it is 
required under the rules of court, we deem it ad- 
visable to file an answer to the counterclaim, in 
case it should be construed as a cross-complaint. 

The Court : It may be received. 



Hagenbeck-Wallace Shows Co. 57 

Mr. Combs: I will come back to that matter in 
a moment. I want to make some further argument 
in connection with the [54] counterclaim, but at 
this time I would like to call the court's attention — 

The Court: Let me see the counterclaim. 

Mr. Combs : It is served now in connection with 
the memorandum of stipulations under the pre-trial 
rule. There are several matters that I would like to 
take up. Our information is that the matinee at 
San Diego took place on time, and that that at 
Pomona began at 3:00 o'clock, not 4:00 o'clock, as 
stated in the momorandum, and therefore counsel 
may disagree with me on that fact. Whatever the 
cause for it is, now, from our standpoint, that con- 
stituting a misstatement in the memorandum of the 
pre-trial, w r e would like to be relieved from such 
commitment, and ask that those matters may rest 
upon the proof. I think the proof will be very 
simple upon the subject. 

The Court: There will be no proof upon the 
matter upon which the pre-trial certificate is filed. 
I understood at the pre-trial that that was the time 
agreed upon, and so did the clerk, and it was there- 
fore certified. I don't know that that makes very 
much difference, however. 

Mr. Combs: I want to call the court's attention 
to the fact that there are, according to our view- 
point, two erroneous facts, as just stated, in that 
connection, and there is a further erroneous fact 
that I know that I did not state, as the pre-trial 
memorandum has recited, to-wit, "That expense of 



58 Fanchon d Marco, Inc., vs. 

maintaining the animals was $400 a month." [55] 
I stated $400 a week, if your Honor please. 

The Court: Yes. You are right about that. The 
word "month" should be "week," and it will be so 
amended. You understand that, Mr. Schaefer? 

Mr. Schaefer: Yes, your Honor, that is a fact. 

The Court: I realize that that is an error, and 
you will make note of the change, Mr. Clerk. Make 
that "week" instead of "month." 

Mr. Combs: There is one other slight matter, 
to-wit, that the notice of rescission was served on 
the 31st of May, but our understanding is that it 
was served on the 1st of June. 

The Court: It was so stipulated or so under- 
stood at the pre-trial, and that will be the date that 
will control. 

Mr. Combs: I have stated those matters, then, 
now, and that is all I have to state in that connec- 
tion. I want to go on in connection with the amended 
counterclaim in this matter. According to our con- 
struction of the same, counsel has pleaded facts 
which show that he has no right to a rescission 
in this matter, and we are at this time, by motion, 
raising the point in the form of a motion to strike 
the counterclaim, and our causes of the motion are 
also set forth in our answer to the amended counter- 
claim. I call the court's attention to paragraph V 
on page 2 : 

"That immediately upon discovering that the 
equipment furnished by the plaintiff was not in 
good condition and [56] ready for use in compli- 



Hagenbeck-Wallace Shows Co. 59 

ance with the terms of the contract between the 
plaintiff and defendant, the defendant notified the 
plaintiff that saio^ equipment was not in good 
condition and ready for use and specified the par- 
ticulars wherein said deficiencies and need of re- 
pairs in said equipment existed. That thereupon 
the defendant was informed by the plaintiff, 
through its agents, that the defendant should as- 
sume to make such repairs and additions as were 
nceessary to restore the equipment in such a con- 
dition as to comply with the terms of the contract. 
That thereupon this defendant proceeded to make 
necessary repairs and additions to said equipment 
and expended therefor the sum of Two Thousand 
Five Hundred Dollars. That although defendant ex- 
pended the sum as aforesaid, it was impossible for 
this defendant to restore the equipment in a condi- 
tion suitable for use for the purpose for which it 
was intended, and that it was necessary in conse- 
quence that defendant return said equipment and 
rescind the contract as hereinbefore alleged. " 

It is our understanding of the law that if a con- 
tracting party assumes and agrees to make cor- 
rections or repairs, if they are necessary, that it 
therefore or thereby, in any event, waives its right 
to rescind, if it ever had any right to rescind, and 
it is our view that this counterclaim does not state 
sufficient facts to constitute a cause of action, 
because it, on the face of it, shows that the de- 
fendant waived any right to rescission. And the 
counterclaim does [57] not state sufficient facts to 



60 Fanckon & Marco, Inc., vs. 

constitute a cross-complaint or counterclaim for 
damages for breach of contract, because the allega- 
tions are insufficient in that respect. And again we 
renew our request that the defendant be required 
to state or elect whether it is proceeding on re- 
scission or on damages for breach of contract, and 
if they are proceeding on these pleadings on either 
of these grounds, that this counterclaim be dis- 
missed. 

Mr. Schaefer: If the court please, on the ques- 
tion of election as set forth in our points and 
authorities, the very case which counsel cited is 
set forth. We have each served our points and 
authorities, your Honor, and filed them. 

The Court: Are they in the record ? Have you 
them, Mr. Clerk? 

The Clerk: There is a statement of facts, your 
Honor, there. Whether the authorities are there 
I don't know. 

Mr. Schaefer: They are attached to it, your 
Honor. In answer to counsel's remarks as to an 
election, if your Honor has read my points and 
authorities, I have answered that in the points and 
authorities. The case he cites, of House v. Piercy, 
doesn't go as far as counsel's argument, but it only 
says that one can only recover on one ground, and 
alternately, but not on both, and of course that is 
true. I acknowledge that. But it doesn't require 
the election to be made at this time. The evidence 
may go in [58] and then the determination has to 
be made as to which cause of action is sustained. 



Hagenbech-Wallace Shows Co. 61 

And, as I say, the case counsel cites in his brief 
doesn't go 

The Court: Let me make this observation. I 
understood at the pre-trial hearing that you elected 
to proceed on the contract, or that you were pro- 
ceeding on the contract. Am I in error on that*? 

Mr. Schaefer: I understood the matter wasn't 
settled, and that you said I was not required at that 
time to make an election. 

The Court: I stated that the action is on the 
contract, and you said, "That is correct," and I 
said, "The action being on contract, it is obvious 
that election is required." 

Mr. Schaefer: That is true. The action is on the 
contract. 

The Court: Yes. 

Mr. Schaefer: But I think that is on the ques- 
tion of counsel's other causes of action. He has, I 
think, three, and your Honor ruled at that time 

The Court: The others were disposed of, dis- 
missed. 

Mr. Schaefer: Yes. 

The Court: The others were dismissed because 
of the determination that the action was on the con- 
tract. 

Mr. Schaefer: That is correct. 

The Court: So the other causes were dismissed. 

Mr. Schaefer: That is correct. Now, with re- 
spect to [59] the argument that the acts of the 
defendant in making repairs, I take it that the force 
of his argument is that that is a waiver, but I 



62 Fanchon & Marco, Inc., vs. 

don't see that the court can rule on that matter 
now. The most that can be shown is that it was an 
indulgence by the defendant in an 1 attempt to 
preserve the ownership. There is in evidence before 
your Honor a certain sponsored contract, and the 
defendant was bound by these contracts, and the 
evidence will develop, and I don't see how your 
Honor can rule until there are before your Honor 
the conditions under which tjiose repairs were 
made. It is alleged that they were made an!d 
charged against the plaintiff. That is not a matter 
that can be passed upon at this time, because it is 
a matter of proof, and we are prepared to offer 
proof on that particular point. 

The Court: The question is, whether you have 
stated an issue which requires proof under the 
law, and that is what pleadings are for, is to fix 
the issue and save the time of counsel and the par- 
ties and the court in exploring the whole field, to 
find out what the real facts are. The parties are 
supposed to know what the facts are, and then 
to present the issue so that it is concise. 

Mr. Schaefer: That is correct, and I understand 
that that is one of the purposes of the pre-trial. 

The Court: Yes. 

Mr. Schaefer: And we settled that matter, and 
your Honor ruled at that time that the counter- 
claim might be [60] amended, and that amendment 
has been filed, and I think it follows the outline of 
your Honor at that time. And we think the matter 



Hagenbeck-Wallace Shows Co. 63 

is now properly before the court and that the 
counterclaim is sufficient. 

The Court: You think you have stated facts 
that avoid the rule? 

Mr. Schaefer: Yes; we are satisfied on that. 

The Court: I will hear the testimony on that 
and reserve the matter for the future. 

Mr. Combs: At this time we would like to call 
Mr. Paul Eagles as an adverse witness. 

The Court: Call him. 

Mr. Combs: For cross examination under the — 

The Court : Call him. We will find out. 

Mr. Combs: Yes. Mr. Eagles. [61] 

PAUL EAGLES, 

called as a witness on behalf of plaintiff, being 
first duly sworn, testified as follows: 

The Clerk: State your name, please. 

A. Paul Eagles. 

Direct Examination 

Q. By Mr. Combs: Where do you reside, Mr. 
Eagles ? 

A. In Los Angeles, 3523 West Olympic. 

Q. What is your occupation? 

A. I am a merchant. 

Q. During the past years of your life have 
you had any connection with circuses or a circus? 

A. Yes. 

Q. Will you relate to the court what that con- 
nection was? 



64 Fcmchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

A. I have been purchasing agent and had various 
jobs, and also business manager, and manager. 

Q. For what period of time ? 

A. Well, over a period of approximately 25 
years. 

Q. And for what circuses did you engage in 
those activities during that period of time? 

A. Well, Al G. Barnes. 

Q. Relate to the court approximately what years, 
and what you did for Al G. Barnes. 

A. Well, I was purchasing agent and I was busi- 
ness [62] manager. 

Mr. Schaefer: I am sorry. I can't hear, your 
Honor. 

The Court : Speak so that all of us can hear you. 

A. I was purchasing agent and I was business 
manager. 

Q. By Mr. Combs: And for what years, Mr. 
Eagles'? A. The last year was 1938. 

Q. What was the first year? 

A. Oh, about 1915 or 1914, in there. 

Q. Subsequent to 1938 what circus did you work 
for, if any? Did you say 1928 or 1938? 

A. 1938. 

Q. Subsequent to that year 

A. Mostly with Al G. Barnes. 

Q. Did you ever work for the Great American 
Circus ? A. Yes. 

Q. What year? A. In 1939. 

Q. In what connection? A. Manager. 



Hagenbech-Wallace Shows Co. 65 

(Testimony of Paul Eagles.) 

Q. Who employed you? 

A. Wayne Daillard. 

Q. Do you know who paid your salary? 

A. Fanchon & Marco or Great American Circus. 

Q. How long did you work for them in that 
capacity ? 

A. A little over two weeks. 

Q. When did you first begin to work for them 
in that [63] capacity? 

A. About the 19th or 20th of May. 

Q. 1939? A. 1939, yes. 

Q. Relate to the court the circumstances of 
your employment, that is to say, was it in writing, 
or by oral employment? 

A. I was called out to Fanchon & Marco's office 
by Wayne Daillard, and he told me they wanted 
me to manage the circus, go out and get it ready 
and take it over to Inglewood and open it. 

Q. Who was present at that conversation? 

A. Ben Austin and, I believe, Marco. 

Q. Were those all the persons present other than 
yourself? A. I think so, at that time. 

Q. And that took place at the offices of Fanchon 
& Marco? 

A. Yes, sir, in Wayne Daillard 's office. 

Q. What did you say in response to Mr. Dail- 
lard 's statement? 

A. I told him I would go to work. 

Q. Was anything discussed regarding your sal- 
ary? A. Yes, sir. 



66 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. What were the terms of that ? 

A. They handed me a budget list, and it had in it 
a [64] manager at $100 a week. 

Q. And you took it that that was your salary? 

A. Yes, sir. 

Q. And that is the amount you were paid? 

A. That is the amount I was paid. 

Q. Did you begin work immediately? 

A. The next morning. 

Q. And that was approximately the 19th of 
May, 1939? 

A. Yes, somewhere in there. It was on a Friday 
morning, just prior to the 24th. 

Q. Upon the 19th you went to Baldwin Park, 
did you? A. I went to Baldwin Park, yes. 

Q. What is Baldwin Park? What significance 
has that in relation to this circus? 

A. That is where the Hagenback- Wallace cir- 
cus was wintering. 

Q. That was the winter quarters of the Hagen- 
back & Wallace circus property? A. Yes, sir. 

Q. Was the equipment of the Hagenback & 
Wallace Show there at that place, or at least for the 
most part? 

A. For the most part, except some things down 
in the city proper. 

Q. Was the equipment, including the howdahs, 
there or elsewhere? 

A. I think they were over at the studio. [65] 

Q. What studio? A. M. G. M. 



Hagenoeck-Wallace Shotvs Co. 67 

(Testimony of Paul Eagles.) 

Q. What did you do upon your arrival at 
Baldwin Park? 

A. I met Mr. Clawson there, who was in charge 
of the property of the Hagenback- Wallace circus 
shows. 

Q. That was your first act upon your arrival, 
that you met him? A. Yes. 

Q. Was anyone with you when you arived other 
than you and Clawson there? A. No. 

Q. Did anyone join you during that day? 

A. Wayne Daillard came out. 

Q. What time did he arrive? 

A. Oh, some time in the forepart of the morn- 
ing; I would say somewhere around 9:00 o'clock. 

Q. What time did you arrive? 

A. About 7:30 or 8:00 o'clock. 

Q. What was the first thing that you and Mr. 
Clawson did? 

A. I told him I was going to be the manager of 
the new circus, and I was going to help him get 
the stuff out. 

Q. What did he say? 

A. He said all right. 

Q. There were just the two of you present at 
that conversation? [66] 

A. I believe so. There could have been other 
people. I believe Brown, the caretaker, was there. 

Q. Harvie Brown? A. Yes. 

Q. What did you do then? 

A. We started to lay out what we were going to 
take. 



Did you examine those items at that time 1 ? 
Generally, yes. I didn't personally examine 



68 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. What did you lay out first, if you recall? 

A. Wagons and poles and tents, and stuff like 
that. 

Q. 

A. 

them. 

The Court: You didn't what? 

A. Personally examine them all — just generally. 

The Court: Let me understand. You say you 
didn't personally examine them — just generally? 

A. The wagons were sitting in the yard, and I 
walked by them and looked at them, that is all, and 
figured the ones we were going to take. There were 
some 55 or 60 pieces there, and I knew we were not 
going to take that many. 

Q. By Mr. Combs: At that time did you pick 
out the wagons you were going to take? 

A. Yes. 

Q. How many did you pick out ? 

A. Around 25 or 26 wagons, somewhere in 
there. 

The Court: Let me ask you: How many wagons 
were there altogether? 

A. I would say 48 to 50. [67] 

The Court: And you had the pick, and picked 
23; is that the idea? 

A. Yes. 26 was the exact number that I finally 
ended up with. 

The Court: 26? A. Yes. 



Hagenbeck-Wallace Shows Co. 69 

(Testimony of Paul Eagles.) 

Q. By Mr. Combs: Now, after that, after you 
picked out the wagons, what did you do? 

A. Well, I started employing people around 
there for different positions, bosses. 

Q. And in that connection whom did you em- 
ploy ? Do you have any record of that ? 

A. Well, yes. I employed a boss property man, 
a head porter, and a 

Q. Who was the boss property man? 

A. Oh, I don't know. I would have to look at 
the records. 

Q. But you recall that Pat Graham was the 
head porter? A. The head porter. 

Q. Who else did you employ, Mr. Eagles ? 

A. All the general bosses there. Singleton was 
there, but he had been employed by Charlie Morgan, 
of Fanchon & Marco. 

Mr. Schaefer: I move to strike that out as a 
conclusion of the witness. 

Mr. Combs: This man was manager of the cir- 
cus, and [68] would be able to say. 

The Court: Bo you know? 

A. He was working there, and he told me he 
was employed by Fanchon & Marco. 

The Court: That will be stricken. The court 
will not consider it. 

Q. By Mr. Combs: What else did you do that 
first morning, the 19th ? 

A. We ordered the tent down, I believe, that 
morning, from storage, at Baldwin Park. 



70 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. That tent belonged to whom? 

A. It belonged to Baker & Lockwood. 

Q. What did you do with the tent? 

A. Took it down at the back lot, and Singleton 
took the poles and his men and started laying 
them out, getting ready to erect the tent back there. 
I also hired a painter to paint all the title of this 
circus off and put " Great American Circus" on the 
side of them. 

Q. Was this all done on that first day? 

A. Yes ; we started. 

Q. Was there anything else you did on that 
first day, that you recall? 

A. Got all the stuff together and started putting 
it all together. 

Q. Did you lay out the tent rigging, blocks and 
falls? A. Singleton did. [69] 

Q. Did you direct him to do it on that day? 

A. Yes. 

Q. Did you examine the poles for the circus? 

A. Yes. 

Q. All of this equipment was second-hand or 
used circus equipment, was it not? 

A. It was. 

Q. You knew that fact at least as early as the 
19th of May, did you not? A. Yes. 

Q. In fact you knew it prior to that time, did 
you not ? 

A. I had it under sub-lease from November of 
1938 until around the middle of March, or later, 
possibly. 



Hagmbeck-Wallace Shows Co. 71 

(Testimony of Paul Eagles.) 

Q. Of 1939? A. Yes, sir. 

Q. You were very familiar with all of this 
equipment? A. Yes, sir. 

Q. Including both what was taken by Fanchon 
& Marco for the Great American Circus and that 
which was not taken ; is that correct ? 

A. That is right. 

Q. What did you do when you arrived at Bald- 
win Park with relation to examining and making 
such repairs as were necessary to the wagons? 

A. Well, I believe that first day I hired a 
mechanic who was on the Barnes Show, Forbes — 
I am sure it was tlae [70] first day — and another 
man who handled the tractors, and I told them to 
look over the wagons that we were selecting, one 
of them to look them over for the rings, to let them 
up and down off the train to see if they were all 
sound, and, if they were not, to get them repaired. 

Q. Under your direction and supervision? 

A. That is so. 

Q. Did he report back to you in that connec- 
tion? A. Yes. 

Q. What did he report to you? 

A. He reported to me that the wagons were 
usable. 

Q. And were there any repairs that were made 
on those wagons? 

A. Yes. I told him to make any necessary repairs 
on the wagons. 



72 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. Were they in such condition as used circus 
wagons would normally be in, at such a time 1 ? 

A. Yes. 

Mr. Schaefer: I object to that as calling for 
the conclusion of the witness. 

The Court: I think, after what he has stated, 
his conclusion is proper. 

Q. By Mr. Combs: And were they, in your 
opinion, in good condition and ready for use in the 
business of the production of a circus at that time? 
I will withdraw that. At the time of May 23rd, when 
delivery was made at Inglewood? [71] 

A. Well, I had used them and we hauled the 
show out with them. 

Mr. Schaefer: I move to strike that answer as 
not responsive, your Honor. 

Q. By Mr. Combs: In your opinion. Just an- 
swer the question. 

The Court : Answer the question as propounded. 

Q. By Mr. Combs: In your opinion. 

A. They were in usable condition, yes. 

Q. Now, was that also true of the tent rigging, 
blocks, falls and chairs? 

A. I didn't make a personal examination of 
those, except the chairs, and I had had them on 
rental before. 

Q. What was the condition of the chairs'? 

A. They were in good condition. I had rented 
them on a number of occasions, even over at the 
Tournament of Roses parade. 



Hagenbeck-Wallace Shows Co. 73 

(Testimony of Paul Eagles.) 

Q. They had been used in January of that 
year, on that occasion? 

A. That is so. And I used them after that at 
Wrigley Field for the Angelus Chair Company, I 
believe it was. 

Q. In your opinion were they usable? 

A. The chairs were in good condition. 

Q. Did they constitute a hazard to the business 
when they were used? A. No. [72] 

Q. With relation to the tent rigging, blocks an 
falls, in your opinion did they constitute a hazard 
to the business at the time of their being used at 
the Inglewood show? 

A. I didn't personally have my hands on them 
or examine the rigging, only just generally seeing 
that everything was in its place. 

Q. Did you have occasion to examine the train 
flat decks and runs that were rented under this 
contract ? 

A. I selected the cars themselves, with Clawson. 

Q. Did you select the calliope? 

A. That is the only calliope on the show, and 
it was there. 

Q. You saw T it there and knew what calliope it 
was, did you not ? A. Yes. 

Q. Now, did you have occasion to examine the 
condition of or the existence of the wardrobe ? 

A. I hired a fellow by the name of George King 
to look that over, who used to be a wardrobe man 
on the Barnes Show. 



74 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. Did he look it over, in your employ? 

A. Yes. 

Q. Did he report back to you 1 A. Yes. 

Q. What did he report to you? 

A. Well, he was short on white pants, and he 
said some of it, some of the stuff, needed cleaning, 
and I believe it [73] was cleaned. 

Q. Did you direct it to be sent out? 

A. I took that up with Clawson and he agreed 
to clean it. 

Q. Did you direct the purchase of wardrobe and 
garments to fill out the band equipment? 

A. I left that to Mr. Daillard, and I don't know. 
They were there when we opened. 

Q. Do you know whether or not the band was 
completely equipped with white caps? 

A. They were when we opened, I am sure. 

Q. Referring to the sleeping cars, do you know 
whether or not there were any blankets, sheets or 
pillow cases or curtains in those cars at Inglewood? 

A. There was some blankets, some sheets, some 
pillow cases; no berth curtains. 

Q. When you were at Baldwin Park, subsequent 
to the 19th and prior to the 23rd of May, did you 
know of the fact that there were no berth curtains 
in the sleeping cars? A. Yes, I knew it. 

Q. You knew there were none there then? 

A. Yes. 

Q. Was anything done about acquiring those 
four items just named, berth curtains, pillow cases, 
sheets and blankets? 



Hagenoeck-W y dllace Shows Co. 75 

(Testimony of Paul Eagles.) 

A. Yes. I called the United Tent & Awning up 
and got a price on some blankets, and told Mr. 
Daillard what it was, [74] and he ordered some. 

Q. Was that also done respecting pillow cases 
and sheets? 

A. I don't remember how they were purchased. 

Q. There were, however, pillow cases and sheets 
when the train arrived at Inglewood? 

A. I couldn't say as to that. 

Q. Berth curtains were ordered from some other 
organization, were they not, or company? 

A. Pat Graham bought them in San Diego, the 
head porter. 

Q. Did you direct him to do so? 

A. I was at the discussion. Daillard was the 
one that authorized him to buy them. 

Q. Did you hear Mr. Daillard authorize or di- 
rect Graham to buy the curtains ? A.I did. 

Q. Did you ever have any discussion respecting 
elephant howdahs? 

A. None that I can remember. 

Q. Did you ever observe the absence or presence 
of elephant howdahs during the course of your 
occupation as manager of this circus? 

A. We wouldn't have had any use for them. 

Q. Why wouldn't you have had any use for ele- 
phant howdahs? 

A. The only place they would have been useful 
was in [75] the grand entry, and that wouldn't fit 
in with the show. 



76 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. You had no grand entry ? 

A. Yes, but we just put the elephants in with 
blankets on. 

Q. Did you ever make a request to Hagenback- 
Wallace Circus for elephant howdahs ?' A. No. 

Q. Did anyone, to your knowledge, make such 
a request? A. No, not to my knowledge. 

Q. Did you know where the elephant howdahs 
were? Did you have occasion to use elephant how- 
dahs ? 

A. Yes, because I had rented them to M. Gr. M. 
Studio. 

Q. And you would have known where to get 
them if you wanted them; is that right? 

A. That is correct. 

Q. Did you have occasion to use elephant how- 
dahs ? A. No. 

Q. I have just referred, Mr. Eagles, to a num- 
ber of items, which include wagons, tent rigging, 
howdahs, calliope, etc., and a few other items. It is 
a fact, isn't it, Mr. Eagles, that a circus of the size 
of the Great American Circus needs a vastly greater 
quantity of equipment than those few items I have 
just referred you to? A. Yes. 

Q. In other words — — 

The Court: You don't need the other words. 

[76] 

Mr. Combs: All right. That is sufficient along 
that line. 



Hagenoeck-Wallace Shows Co. 77 

(Testimony of Paul Eagles.) 

Q. By Mr. Combs: You have referred to your 
activities on or about the 19th of May, 1939. Do 
you recall any other of your activities from that 
date until the date of May 23, 1939, in connection 
with your service as manager of the circus'? 

A. We just continued our painting the show, 
painting out the titles and lettering them, and 
getting it put together, and putting up the tent. And 
we were supposed to have a rehearsal, and we didn't 
have it out there. 

Q. Your time was engaged during that period 
from May 19th until the stuff arrived in Inglewood 
in getting it sorted and passed upon and putting in 
condition this equipment? 

A. That is right. 

Q. You were out there most of that entire time, 
were you? A. All during the day, yes. 

Q. That, in fact, was your entire activity during 
that period of time ? A. Yes, sir. 

Q. During that time did you lay out the tent 
and rigging? A. George Singleton did the job. 

Q. And did you examine it? 

A. I saw it when it was up. 

Q. Did he do so under your direction and super- 
vision? [77] A. Yes, sir. 

Q. And that is true of every bit of equipment 
in connection with the Great American Circus? 

A. Yes. 

Q. In other words, you selected it, laid it out, 
and examined it before it ever left Baldwin Park? 



78 Fanchon & Marco , Inc., vs. 

(Testimony of Paul Eagles.) 

A. That is true. 

Q. And you knew, as a matter of fact, either 
from your own knowledge, or from those subordi- 
nate to you, the exact status, condition and extent 
of all that equipment? 

A. As near as it is possbile for anybody to know, 
with that much stuff that they are loading up in 
three days. 

Q. Either yourself personally, or through em- 
ployees of Great American Circus whom you di- 
rected to ascertain the facts for you? 

A. Yes. Daillard went over some of the stuff 
with us too. 

Q. Do you know what capacity Daillard went 
over the stuff in? 

A. Well, he was my boss. That is all I know. 

Q. He was your boss, and you were responsible 
to him; is that correct? A. That is right. 

Q. Now then, the equipment was delivered at 
Inglewood, was it not? A. Yes, sir. [78] 

Q. On or about the 23rd of May? 

A. That is right, the morning of the 23rd. 

Q. Were you present at Baldwin Park when it 
left there on the railroad cars? 

A. I rode the train out. 

Q. You rode the train right to Inglewood? 

A. Yes, sir. 

Q. Then you were present when it arrived at 
Inglewood? A. That is right. 



Hagenbeck-Wallace Shows Co. 79 

(Testimony of Paul Eagles.) 

Q. Were you present when the equipment was 
taken off the cars? A. Yes. 

Q. And present when it was set up at Ingle- 
wood? A. Yes, sir. 

Q. Was it all completely set up? 

A. Yes, and we had some left over that we sent 
back. 

Q. You sent back some equipment? A. Yes. 

Q. Do you know about what that equipment 
was? 

A. No, but I got a truck out there and they 
loaded it on those stock cars. We didn't have any 
stock going over except elephants and camels, and 
we loaded a lot of stuff in that stock car to send it 
back. 

Q. Now then, the tent was erected and you were 
then ready for the first performance at Inglewood, 
was it not? A. Yes. [79] 

Q. And have you in your possession any rec- 
ords which will give, or from which we can obtain 
a resume of the items constituting the equipment 
delivered at Inglewood? 

A. I have a list of the wagons and their numbers. 

Q. Will you be good enough to hand me that 
list for a moment? 

A. Then I have the general total here in my 
handwriting of the stuff that was on the train. 

Q. All right. Now, referring to this document — 

The Court: Let it be marked, if it is going to 
be referred to, as an exhibit. 



80 Fanchon dc Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Mr. Combs: May we have it marked for identi- 
fication as Plaintiff's Exhibit A? 

The Court: Mark it A-l, and make them A's 
with numerals after them. 

Mr. Combs: Counsel, I will show you A-l for 
identification. 

Q. By Mr. Combs: I show you Exhibit 
A-l for identification, and ask you whether or not 
you can identify that document as the list to which 
you just referred. 

A. Yes, it is a list I made out at Baldwin Park. 

Q. Will you state what these figures on the 
sheet mean ? 

A. At the top it says, "Cook House," and then 
three wagon numbers, which are the wagons the 
cook house was loaded in. The next two are the 
light plants, that the light plants were in. [80] 

Q. Next under "lights"? 

A. Yes, sir. One of the wagons belonged to the 
American Circus Corporation, and the other was a 
wagon furnished by Hagenback & Wallace. The next 
one is the sound wagon. And the next one is the 
white ticket wagon. The next one is the train light 
plant, and the next two are chair wagons. The next 
one is a property wagon. The next one is a blue 
plank wagon. The next one is a sideshow wagon. We 
loaded the menagerie in that. And a wardrobe 
wagon. Another property wagon. Two more plank 
wagons. A jack wagon, and another wagon for the 
padroom canvas. An elephant wagon, for property 



Hagenbeck-Wallace Shows Co. 81 

(Testimony of Paul Eagles.) 

of elephants. A pole wagon, and two padroom trunk 

wagons. A candy wagon. A red ticket wagon. An 

orang-outang cage. This next one is a private wagon 

that belonged to Goebel, and the usual tigers and 

lions loaded in it. Then there are two trucks on 

there. 

Q. The figures that appear in this second column 
comprise the footage of the wagons; is that right? 

A. That is right, 

Q. How many wagons were delivered at Ingle- 
wood? 

A. All these wagons, to the best of my recollec- 
tion. 

Q. 33 in number? 

The Court: Everything on that exhibit was de- 
livered ? 

A. That is right. 

The Court: That answers the question. 

A. There was 26 Hagenback wagons, and there 
was some [81] other stuff on the train too. 

The Court: Is that totaled in the exhibit? 

A. No. 

Q. By Mr. Combs: These wagons were Hagen- 
back- Wallace wagons? A. Yes. 

Q. And the others belonged to other individuals ? 

A. That is right. 

Mr. Combs: We offer the document in evidence 
as Plaintiff's Exhibit A-l. 

The Court: Admitted. 



82 



Fanchon <k Marco, Inc., vs. 



(Testimony of Paul Eagles.) 

PLAINTIFF'S EXHIBIT A-l 



Cook House 


[Footage] 


51 


17% 




52 


19 




53 


17 




54 


13 




Lights 






112 


18 




60 


18 




Sound 






74 


15 




41 


18 


White Ticket 


1200 


10 


Cross Light Plant 


C88 


22 


Chair 


73 


18 


a 


72 


18 


Props 


85 


16 


Blue Plant 


50 


18 


Side Show and Menagerie 


70 


19 


Wardrobe 


84 


16 


Props 


86 


16 


Plank 


80 


16 


i ( 


87 


22 


Jack 


78 


18 


Padroom Canvas & Dogs 


38 


18 


Elephant 


100 


38 


Pole Wagon 


75 


20 


Pad Room Trunk 


71 


20 


n tt a 


76 


18 


Candy Wagon 


40 


18 


Red Ticket Wagon 




16 


Orang 




34 


Bert Nelson 2 trucks 




526i/ 2 






80 


Four 20' trucks 




606i/ 2 




[Endorsed] : 


Filed Nov. 27, 1940. 



Hagenbeck- -Wallace Shows Co. 83 

(Testimony of Paul Eagles.) 

Q. By Mr. Combs : Now, did anything occur at 
Baldwin Park shortly before your departure for 
Inglewood, with reference to a shortage of wagons'? 

A. We had the light plant loaded in a wagon we 
had rented from the Springfield Wagon Works 
representative in Alhambra. We had the light plant 
all put in there, and then they sold them to the 
United Tent & Awning Company. 

Q. So you had to change and get another wagon 
from Hagenback- Wallace for the light plant? 

A. Yes. This was an Al G. Barnes Circus wagon. 
And we took the 50 kilowatt plant out and put it 
in this wagon. 

Q. Was that done under your direction and sup- 
ervision? A. Yes, sir. 

Q. I note that 26 Hagenback- Wallace wagons 
were [82] delivered at Inglewood, whereas the con- 
tract called for 20. Do you know the occasion for 
that? A. I didn't see the contract. 

Q. You never saw the contract yourself? 

A. Away afterwards. I didn't read the particu- 
lars of it. 

Q. All right. Then so far as you knew there 
were 26 wagons to be taken at that time? 

A. That is what my list showed. 

Q. That is what you gathered together as neces- 
sary to take this show over to Inglewood? 

A. Yes. 

Q. Now, at Inglewood was there anything par- 
ticular that occurred with relation to the perform- 



84 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

ance that was extraordinary or did not go off on 

schedule and in a normal manner? 

A. In Ingle wood ? 

Q. Yes. 

A. Well, no. I had to hold the show a little bit 
there on account of the actors hadn't had a 
rehearsal. 

Q. How long did you hold the show for that 
cause ? 

A. To the best of my recollection, about 40 
minutes. 

Q. But it went on about 40 minutes late at that 
time ? A. Yes. 

Q. Was that delay in any way caused by faulty 
or defective equipment? [83] A. No. 

The Court: He said because the actors hadn't 
rehearsed. 

Q. By Mr. Combs: Did the evening show go 
off on schedule and in order? A. Yes, sir. 

Q. What did you do after you completed the 
performance at Inglewood? 

A. Well, we tore the show down and got ready 
to move. It took us all night to tear it down, and 
we got out that morning and loaded it on the 
Santa Fe, and went to San Diego. 

Q. Was there anything extraordinary about the 
length of time necessary to tear the show down? 

A. We had all green help. 

Q. Would you say it was -competent or incompe- 
tent circus help? 



Hagenbeck-Wallace Shows Co. 85 

(Testimony of Paul Eagles.) 

A. Some, of them were all right, competent 
help, and others, the working men, were new and in- 
experienced. 

Q. Where did you get the workmen for this per- 
formance % 

A. I sent Pat Graham out, and he 

The Court: Do you care where he got them? 

Mr. Combs: The only point on that, if your 
Honor please, is that I would make this offer of 
proof in that connection, that these men were just 
general working people that they picked up from 
employment places on Main Street, and not efficient, 
capable circus hands. 

Mr. Schaefer: It is immaterial where they got 
them, [84] if they were green men. 

The Court: If you go into that, it would open 
the field for cross examination that would consume 
considerable time. 

Q. By Mr. Combs: Directing your attention to 
a stage upon which the Fanchonettes performed, 
was there anything extraordinary in so far as 
the circus was concerned about that piece of equip- 
ment? 

A. Yes. It was not suitable for quick movement. 

Q. How long did that take to construct and tear 
down? 

A. Well considerable time. The first day we set 
it up the men that built it should have been 

Q. That was in Inglewood? 

A. That was in Inglewood. 



86 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q 1 . Who tore it down? 

A. I would say it took four or five hours to 
put it up. And then our men struck it, and we 
loaded it on the pole wagon that night. 

Q. You loaded it on the pole wagon? 

A. Yes. 

Q. And took it to the railroad cars and shipped 
the whole of the equipment to San Diego? 

A. That is right. 

Q. When did you arrive in San Diego? 

A. Along in the afternoon. I don't remember 
the exact time. [85] 

Q. That would be the afternoon of the 24th of 
May? 

A. No, that was — we showed in Inglewood the 
24th of May, and that would be the 25th of May. 
It took us all night to load out, and we traveled on 
the 25th. 

Q. And arrived there on the 25th ? A. Yes. 

Q. Did anything occur at Inglewood in relation 
to setting up the show out of the ordinary — I mean 
at San Diego — out of the ordinary? 

A. No, at San Diego we moved right along. 

Q. You got the show set up in order and nothing 
out of order occurred? 

A. We hired some tractors there to pull us on 
the lot, 

Q. In connection with that, relate to the court 
what the occasion for hiring the tractors was. 



Hageribeck-Wallace Shows Co. 87 

(Testimony of Paul Eagles.) 

A. It was a soft, sandy lot, and we didn't have 
any power. 

Q. What happened when the wagons w r ere pulled 
out on the soft, sandy lot? 

A. We just pulled them in off the street as far 
as they could go on hard ground, with the show's 
trucks, and then the hired caterpillars pulled them 
over and spotted them. 

Q. What was the occasion for using caterpillars ? 
Was it because the lot was so difficult to negotiate 
with heavy wagons? A. That is right. [86] 

Q. And these wagons stood up under the strain 
of hauling around with caterpillars, did they? 

A. Yes. 



Q 

A 

Q 

A 

Q 

A 

then 

Q 
Q 
Q 

A 

Q 

ard? A. Yes. 

A. Yes. 

Q. And equipment normal and up to standard 
at that time ? A. It was all satisfactory. 



All of them at that time ? 
Yes. I can't remember of any breakage. 
How many shows did you have at San Diego t 
We gave five shows, I believe. 
And they all went off on schedule? 
One was at night, the night of the 26th, and 
we was in San Diego the 27th and 28th. 
Five shows, and all on schedule ? A. Yes. 
And as expected? A. Yes, sir. 

Nothing extraordinary occurred? 
Not that I know of. 
The performance normal and up to stand- 



88 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. What did you do after completing those five 
performances in San Diego? 

A. We hired another tractor that night to come 
off with, and we tore the show down and hauled 
it off. 

Q. And where; did you go ? 

A. Back to the train again, and loaded it on the 
flat [87] cars. And from there we went to Santa 
Ana. 

Q. Did anything occur at Santa Ana with rela- 
tion to the equipment that was out of the ordi- 
nary? 

A. Yes. We had a long hill there, and I think 
the pole wagon went over the side of the run. 

Q. What was the occasion for that ? 

A. I wasn't there. All I know is the report that 
it was so. 

Q. Who reported it to you? 

A. The trainmaster — or Pat Graham came down 
and told me it was reported to him by the train- 
master. 

Q. Are you able to say whether or not it went 
over the side of the run because of some faulty 
construction of either the wagon or the run? 

A. I don't know. 

Q. Have you ever had opportunity to observe a 
wagon slip off a run before, in the conduct of a 
circus? A. Yes. 

Q. In fact, that is usually an accident 1 that 
occurs as a result of wrong turning? 



Hugenbeck-Wallace Shows Co. 89 

(Testimony of Paul Eagles.) 

A. It could be, if he didn't handle the pole of 
the wagon properly coming across the platform. 

Mr. Schaefer: I move to strike that out, your 
Honor. He wasn't there, and he has given what 
might be a reason. 

The Court: He is giving his ideas as a man fa- 
miliar with this sort of business, and I think it is 
proper. The [88] court will only give it such weight 
as it ought to have, anyway. 

Q. By Mr. Combs: Now, in other words, it is 
a more or less common accident 

The Court : The other words do not help us any. 

Mr. Combs: All right. Withdraw the question. 

Q. Then was there anything else that occurred 
at Santa Ana out of the ordinary, in the produc- 
tion of this circus ? 

A. We were late, to start with, getting in there. 
If I remember correctly, it was about 9 :30 when we 
got into San Diego, in the morning. 

Q. What time were you due there? 

A. We was off the lot a little after 2:00 o'clock 
in San Diego, and should have been — about 3:00 
o'clock — and we should have ben there about 6:30 to 
7:00. 

Q. Do you know what the occasion for that 
lateness was? A. No, I didn't even ask. 

Q. Just a case of the train not getting there? 

A. Not arriving. 

Q. You arrived at 9:30 instead of about 6:00 
o'clock? A. That is my recollection. 



90 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. What did you do after it arrived? 

A. We unloaded the show, and took it up to the 
lot, which was about three or three and a quarter 
miles, and started erecting our tents. 

Q. In your experience as a showman, is three 
[89] to three and a quarter miles a long or a short 
haul? 

A. That is considered a long haul. 

Q. What is considered a normal or ordinary 
haul ? A. A mile to a mile and a half. 

Q. Do you know anything with respect to the 
manner in which the equipment was operated on 
that long haul from the railroad to the lot? 

A. Well, they had difficulty — they reported to 
me that they had difficulty with one wagon. 

Q. What was reported to you with relation to 
that wagon? 

A. That they had a hot box. One of the hired 
trucks was hauling it. 

Q. Do you know anything about the speed at 
which that wagon was being hauled ? 

A. I do not. 

The Court : A hot box on one of the wagons ? 

A. On one of the wagons, the plank wagon, I 
believe it was. 

Q. By Mr. Combs: It was a plank wagon? 

A. I believe it was. 

Q. That was the only one that was reported 
to you as out of order at that time? 

A. It is the only one we had trouble with. 



Hageribeck-Wallace Shows Co. 91 

(Testimony of Paul Eagles.) 

Q. At Santa Ana? A. At Santa Ana. 

Q. Now, what did you do after you learned that 
the wagon [90] had a hot box? 

A. Sent the shop man up to find out about it, 
Forbes, and a fellow that he had. 

Q. Did you get any report from them? 

A. They reported back to me that the wagon 
was on the way up there. 

Q. How soon did they make that report? 

A. Within 15 or 20 minutes. 

Q. Within 15 or 20 mnutes? A. Yes. 

Q. Then will you state that the wagon arrived 
at the lot in Santa Ana prior to and preparatory 
to erecting the equipment? 

A. I don't remember accurately. 

Q. Approximately an hour or so after the ar- 
rival of the train? 

A. After the arrival of the train, yes. 

Q. I am just guessing on that. 

A. Approximately an hour and a half. 

Q. Did anything abnormal occur in the erection 
of the equipment at Santa Ana that day? 

A. Not that I can remember. 

Q. Did the show go on on schedule that day? 

A. No. 

Q. How long did it take that day, if you recall, 
to erect the Fanchonette stage ? [91] 

A. Well, considerable time. 

Q. Will you say that it took as much as from 
four to seven hours to erect that stage ? 



92 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

A. Not seven, no. I would say it would take an 
average of two and a half hours. 

Q. Two and a half hours, an averaged 

A. Yes. 

Q. The Fanchonette stage was no part of the 
equipment belonging to Hagenback- Wallace, was 
it? A. No. 

Q. That belonged to Fanchon & Marco, did it 
not? 

A. It was provided for by them. I have who it 
belongs to here, because I returned it to them, I 
believe. No, I haven't. It was somebody they rented 
it from. 

Q. In Inglewood, and it was not upon the cricus 
train ? 

A. It was loaded on the circus train every night. 

Q. I mean prior to your arrival in Inglewood? 

A. No. 

Q. Did you take over a large quantity of the 
equipment in addition to that at Baldwin Park, 
on your arrival at Inglewood? 

A. We made some swinging ladders there, and 
we cut the big ring curbs up, reduced them in size, 
so we could load them in the wagon. They were 
great big wide ring curbs, and we just cut them 
in size. 

Q. Back to Santa Ana again: Did anything 
occur in the [92] production of that circus that 
delayed or interfered with the thing ? 

A. All the things we talked about. I was ready to 
show at 5:30. 



Hagenbeck-Wallace Shows Co. 93 

(Testimony of Paul Eagles.) 

Q. What time was the show supposed to be 
produced ? 

A. It was supposed to be at 2:15 in the after- 
noon. 

Q. Then you were about two hours and fifteen 
minutes late? A. That is right. 

Q. What was the occasion for that lateness % 

A. Everything in general. 

Q. What do you mean by that? 

A. I mean late arrival, long haul, and the floor 
held us up a little. 

The Court: 15 or 20 minutes, you said? 

A. Something like that, and the laying of the 
stage. That is about it, 

Q. By Mr. Combs : What about the men % 

A. Yes, the men were still green. They were 
coming and going. We had a tremendous turnover 
in labor every day. 

Q. Hard to manage, and hard to get others to 
work efficiently and fast ? 

A. That is right, They didn't know what to do, 
and we didn't have enough bosses to show them. 

Q. In your experience with circuses, do you very 
occasionally or rarely have a hot box in the equip- 
ment? [93] 

A. It is not uncommon. 

Q. It is not uncommon % A. No. 

Q. What did you do after the performance in 
Santa Ana? 



94 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

A. After the night performance, we tore down 
in the usual manner and loaded the stuff in the 
wagons and hauled them back to the train. 

Q. Was there anything abnormal about that on 
that occasion^ 

A. The same wagon gave us trouble going back, 
although we had greased it, 

Q. But you greased it and it did operate all 
right I 

A. No. It gave us trouble. It had another hot 
box. 

Q. Did that delay you any in getting the equip- 
ment on the train'? A. It delayed us some. 

Q. How much? A. Oh, 30 minutes or so. 

Q. Then what occurred after you got the stuff 
loaded in Santa Ana? 

A. We went to Pasadena. 

Q. When did you arrive in Pasadena ? 

A. We were late getting into Pasadena, very 
late. 

Q. How late? 

A. I don't recall the time, but I know it was 
late. 

Q. Several hours? [94] A. Yes. 

Q. Was that due in any way to the condition of 
the equipment, or was the cause of it the trans- 
portation of the railroad? 

Mr. Schaefer: I object to that. Let him tell what 
it was. 



Hagenbeck-Wallace Shows Co. 95 

(Testimony of Paul Eagles.) 

The Court: What was the cause of the delay? 

A. I was asleep. I don't know. 

Q. By Mr. Combs: You don't know? 

A. I was on the train. I went to sleep, and I 
know we were late into Pasadena. 

The Court : Do you know what time you arrived 
in Pasadena. 

A. I can't recollect exactly. It was in the late 
morning some time, I would say around 9:30 to 
10:00 o'clock. 

The Court : What time should you have arrived ? 

A. We should have arrived there possibly at 
8:00 o'clock or 8:30. 

Q. By Mr. Combs: What time did you leave 
Santa Ana? 

A. I believe it was about 6:30. I am not very 
clear on it. 

Q. What occurred when you arrived at Pasa- 
dena? 

A. We hauled the stuff out to the lot, all the 
wagons and everything, and started to erect the 
tent and the main falls, and the rope on the third 
pole, I believe, was the one that broke. It snapped 
about three times when we were [95] pulling the 
peaks. 

Q. Did anything else occur other than that at 
Pasadena? A. We lost the afternoon show. 

Q. Did you get the main fall repaired? 

A. Yes ; they spliced the rope, I am sure. 

Q. Do you know who spliced it? 



96 F anchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

A. I believe Singleton or one of his sail-makers. 
I couldn't say. 

Q. Had you ordered any rope prior to that time 
for the main falls ? A. Yes. 

Q. How much rope? A. 1500 feet. 

Q. From whom? 

A. Wired the order in to Daillard. 

Q. When did you do that? 

A. At Inglewood. 

Q. At Inglewood? A. Yes, sir. 

Q. An extra or spare rope for the main fall, 
is that right? A. Yes. 

Q. And it had not arrived by the time you got 
to Pasadena? A. No. 

Q. Was there anything else in relation to the 
equipment [96] that was abnormal or unusual on 
that day at Pasadena? 

A. I don't think so. We showed that night. 

Q. You showed that night? A. Yes. 

Q. Did the show go on normally or in order that 
night % 

A. Yes. I had a complaint from a couple of 
actors, but that was straightened out. 

Q. The performers all went on and performed 
their acts ? A. That is right. 

Q. In fact they did so at all of the productions 
of the circus that were given, did they not? 

A. That is right. 

Q. Then after Pasadena what did you do? 



Hagenbeck-Wallace Shows Co. 97 

(Testimony of Paul Eagles.) 

A. Tore down and loaded up and went to Po- 
mona. 

Q. Did anything abnormal happen on that oc- 
casion ? 

A. The men left the dog wagon on the lot, and 
after we were ready to load they come down to that 
place where the dog wagon was, and they found it 
was off the lot. 

Q. And you had to go back and get it? 

A. Yes, we had to go back and get it. 

Q. That delayed your departure slightly, didn't 
it? A. It did. 

Q. But there was nothing in connection with the 
equipment that caused that or any other delay there 
at Pasadena? 

A. No. They just overlooked it in the dark. 

The Court: What kind of a wagon did you say? 

[97] 

A. A dog wagon. We had a dog act. 

Q. By Mr. Combs: Then when did you arrive 
in Pomona? 

A. We arrived in Pomona about 8:30, if I re- 
member correctly. 

Q. On what day? 

A. On the 1st of June; the 30th at Pasadena, 
and the 1st at Pomona. 

Q. Wasn't it the 31st day of May? 

A. Pomona, that is right, the 31st day of May, 
on a Wednesday. 



98 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. Did you get the show up in order on that 
day? A. Yes. 

Q. On time? 

A. We were just a little late. I would say 3:00 
o'clock we opened the doors. 

The Court: That was Pomona? A. Yes. 

Q. By Mr. Combs: What was the occasion for 
being that late? 

A. The usual thing, just that the men didn't 
function properly, although we were better organ- 
ized there than we had been at any other time. 

Q. Green labor? A. That is right. 

Q. And not the equipment? 

A. I don't remember of any failure of equip- 
ment in [98] Pomona. 

Q. Did you put on the matinee? A. Yes. 

Q. In order? A. Yes. 

Q. Did you put on the evening show? 

A. Yes. 

Q. In order? A. Yes. 

Q. Nothing abnormal occurred at either of those 
shows? A. Not that I can recall. 

Q. Subsequent to that what did you do? 

A. That is the night we had the labor trouble. 
And we were billed to go to Glendale, and at the 
last minute Daillard, who had been away all day — 
I think it was around 10:00 o'clock or 10:30' — he 
came back and told me that the A. F. A. had pulled 
out some acts. 

Q. What is the A. F. A. 



Hagenieck-Wallace Shows Co. 99 

(Testimony of Paul Eagles.) 

A. American Federation of Actors. 

Q. A union? A. That is right. 

Q. Did Daillard say anything else at the time? 

A. We had our transportation paid to Glendale, 
and somebody went down and changed the destina- 
tion to Baldwin Park. 

Q. Did you do that? [99] A. I did not. 

Q. Did you go to Baldwin Park? 

A. I went to Baldwin Park. 

Q. When did you arrive there? 

A. In the early morning. 

Q. On the 1st of June, in the early morning? 

A. Yes. 

Q. What occurred when you arrived at Baldwin 
Park? 

A. We unloaded the train and took it back in 
winter quarters, and I stayed there with the crew 
and put the show away and returned all the rented 
stuff to the different people. We had horses from 
some people; we had tents from others, Baker & 
Lockwood. 

Q. Under whose direction did you do that? 

A. Wayne Daillard 's. 

Q. And there was no further performance of 
the circus after that? A. No. 

Q. Back again, Mr. Eagles, to Pasadena: Did 
you have any extraordinary or unsual trouble with 
the laying of the stage in Pasadena? 

A. In Pasadena is where Red Forbes started to 
lay that stage, and the property boys never laid it, 



100 Fcmchon <& Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

and he brought his crew over there and thought 

possibly he could get some of them to lay it, but 

he didn't and we had to put a lot of extra men on 

there to lay the stage, and it was quite a [100] 

problem. 

Q. The loss of time in the laying of that stage 
must have been of concern to you prior to that time, 
because you called in Forbes to assist? 

A. That is right. 

Q. And you had already noted that it was a 
hazard or obstacle to getting the equipment erected 
in time for performance; is that right? 

A. That is right. 

Q. Again at Pasadena, did anything occur there 
with relation to the refund of admissions? 

A. No — at Santa Ana. 

Q. Was it at Santa Ana? A. Yes. 

Q. Isn't it true that at Pasadena you w^ere 
ready to put on the show^ and 

A. No; that was Santa Ana. We missed the 
afternoon show in Pasadena. 

Q. But at Santa Ana you were ready to put 
on the afternoon show, and did anything occur in 
that connection? 

A. I had all the performers ready, and notified 
Mr. Clawson, who was the equestrian director, that 
we would show that afternoon, and the committee 
who were showing there wanted the return of some 
money, and in the meanwhile they went out to the 
wagon with Mr. Daillard, and I believe he turned 
back some money. [101] 



Kagenbeck-W allace Shows Co. 101 

(Testimony of Paul Eagles.) 

Q. About $90? 

A. I believe so. And there wasn't any customers 
there, so I called it off. 

Mr. Combs: That is all. 

The Court: Cross examine. 

Mr. Schaefer: I understand that Mr. Eagles 
has been called as an adverse witness. Is that right? 

Mr. Combs: That is right. 

Cross Examination [102] 

Q. You say you didn't personally examine all 
the equipment? A. That is true. 

Q. And you didn't personally examine the 
wagons? [107] A. Only in a general way. 

Q. How carefully did you make the examina- 
tion? 

A. I probably walked around them and looked at 
them in a general way. 

Q. You made no examination of the axles or 
the boxings? A. No. 

Q. There were probably 48 or 50 wagons there? 

A. That is right. 

Q. And you selected wagons merely for their 
size, or what you thought would be their ability 
for carrying the loads? A. That is right. 

Q. And out of that group you picked out 26? 

A. That is what my record shows. 

Q. Now, the men you employed, were they what 
might be called the heads of departments? You em- 
ployed a porter? 

A. A head porter, yes. They were heads of de- 



102 Fanchon dk Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

partments, yes, with the exception of George Single- 
ton. [108] 

A. Well, generally speaking, they were in good 
condition. There were some repairs made on them 
in Inglewood, and they passed the test there. There 
was some decking on one or two of the cars that 
I fixed in San Diego, spliced in some lumber around 
the decking. 

Q. Were there any other repairs made to the 
cars other than in San Diego? 

A. Yes, at Inglewood. We had an inspection at 
Baldwin Park. 

Q. Who made those repairs? 

A. The Santa Fe Railroad mechanics. 

Q. And were you there when they made them 1 ? 

A. I was at lunch with Mr. Clawson when the 
two of them come down and reported that there 
was a couple of minor repairs they wanted to make 
on the outside of the cars, and [116] he agreed to 
take us over to Inglewood if we had air, if the 
valves were in good shape, the air lines, and the air 
was all right when the Pacific Electric coupled on 
to us. And then they took the train back to Los 
Angeles and made two or three hundred dollars 
worth of repairs. 

Q. Did I understand you to say they were minor 
repairs ? 

A. Yes. They gave the train a general going 
over. They even repaired a step on one of the 
coaches. 



Hagenbeck-W,allace Shows Co. 103 

(Testimony of Paul Eagles.) 

Q. Were there any blankets or sheets or pillow 
cases? A. There were some. 

Q. How many? 

A. I didn't count them. Mr. Graham did. I 
haven't the count here in front of me. 

Q. By the way, Mr. Clawson was the representa- 
tive, so far as you knew, of Hagenback- Wallace out 
there ? 

Mr. Combs: He was your employee, too. 

Mr. Schaefer: He was an employee when he 
came over in the circus. I am not denying that. 

The Court: Proceed. 

Q. By Mr. Schaefer: Mr. Clawson was the man 
in charge of the winter quarters? A. Yes. 

Q. Did you have any conversation with Mr. 
Clawson with respect to the blankets and sheets and 
pillow cases? 

A. Yes. I believe I asked him if he was going 
to furnish them — or Daillard was there, and I can't 
remember [117] the conversation, but I know that 
Mr. Daillard asked me to call up the United Tent 
& Awning Company, or somebody, and get a figure 
on some blankets, used army blankets. 

Q. What I am asking you now is for your con- 
versation with Mr. Clawson. 

A. I can't recall it, exactly what the conversa- 
tion was. 

Q. I don't want it exactly. I want only the sub- 
stance. 



104 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

The Court: Was it with Clawson? 

A. Yes. 

Q. By Mr. Schaefer: What did he say to you 
about it? 

A. I can't recall that. 

Q. Do you remember the substance of it? 

A. No, I don't. 

Q. Did you talk to him about it? 

A. The three of us were there, Daillard and 
Clawson and myself. 

Q. Did you or Daillard say anything to Mr. 
Clawson about the shortage? 

A. I believe we asked him if he was going to 
furnish them. 

The Court: What did he say? 

A. I think he said no, because we ordered them 
again too; Fanchon & Marco ordered them. 

Q. By Mr. Schaefer: Isn't it a fact that Mr. 
Clawson said that he would get them, and attempted 
to get them, and telephoned to someone and couldn't 
procure them? Don't you [118] recall that? 

A. No, I don't. I say, I am a little hazy on that, 
Mr. Schaefer. [119] 

A. Well, it was second-handed stuff. I wouldn't 
want to venture a guess on whether it was good or 
bad. I know what use it had had, and so on. It was 
in condition equal to the use it had had. [120] 

Q. On your arrival at San Diego, you say you 
showed in San Diego on schedule. How much time 
did you have to erect the equipment at San Diego ? 



Hagenbeck-Wallace Shows Co. 105 

(Testimony of Paul Eagles.) 

A. We had from the time we arrived in there on 
the 25th, and all the rest of that day. 

Q. An entire day; is that right? 

A. Yes. 

Q. You arrived at what time on the 25th ? 

A. Some time in the afternoon. 

Q. When did you leave Ingle wood? 

A. We left Inglewood the morning of the 25th. 

Q. And you arrived the afternoon of the 25th? 

A. Arrived in the afternoon, whatever time it 
took the Santa Fe to run us down there. 

Q. When was your first performance in San 
Diego? 

A. Our first performance was on the night of 
the 26th. 

Q. Then you had approximately a day and a 
half to erect your equipment; is that right? 

A. Yes. 

Q. You said that the performance went off in 
San Diego according to schedule ? [122] 

A. That is right. 

Q. Were there any acts that were not performed ? 

A. Well, I have the performances right here, 
and I am sure they all went off. 

Q. They all were performed? A. Yes. 

Q. What time did you leave San Diego? 

A. It was a little after 2:00 o'clock when we 
pulled off the lot, and I imagine an hour or two 
hours after that we left San Diego. 

Q. Did you leave San Diego late? 



106 Fanckon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

A. I don't know. I paid off the tractors, and 
it was pretty well loaded when I went down to my 
stateroom, and I don't remember whether we got 
out of there late or not. I am sure we must have 
gotten out rather late, because it was after 2:00 
when we got off the lot. 

Q. Did you have some difficulties'? 

A. The tractors we had pulled us off the lot, a 
very difficult lot. We had four tractors taking us 
off of there. 

Q. When did you arrive in San Diego? 

A. About 9:30. 

Q. Was that early or late ?' 

A. That is a little late. 

Q. Now, a wagon went off the runs. Will you 
explain what runs are? 

A. The runs are the things that come from the 
street [123] up to the flat car, made out of wood 
with cross pieces, just like a driveway, without any 
floor in them. 

Q. It is a driveway off of the flat car? 

A. Yes. 

Q. And it was a pole wagon that went off the 
runs ? ! 

A. It went off the side of the gunwales of the 
flat car. 

Q. I will ask you if you didn't say to me then, 
"This was due to the faulty condition of the runs"? 

A. I don't believe I did. 

Q. You don't believe you did? A. No. 



Hagenbeck-Wallace Shows Co, 107 

(Testimony of Paul Eagles.) 

Q. The faulty condition of the runs — 

A. Those were repaired in San Diego. 

Q. Who repaired them? [124] 

A. Whitey Beeson. 

Q. At whose expense? A. I don't know. 

[125] 

Q. What was the condition of the rope in Pasa- 
dena? Was it good or bad? 

A. Just like any second-hand rope. 

Q. Would that be good or bad ? [134 J 

A. It would be medium. 

Q. Do you remember telling me on the occa- 
sion mentioned, "The ropes were all in very poor 
condition"? Did you so state to me? 

A. I can't recall it. 

Q. Do you remember stating to me, " While we 
had some green labor, yet the equipment itself de- 
layed us tremendously"? Did you so state? 

A. I don't recall that part of the conversation. 

Q. Did you state to me at the time mentioned, 
"I know that the elephant howdahs never arrived; 
that the wardrobe [135] was in bad condition, some 
entirely unusable"? Did you so state? 

A. I might have. I probably told you that. 

Q. Did the calliope operate on any occasion? 

A. I don't know about that. 

Q. Did you hear it operate? 

A. I didn't hear it operate. I heard it previous 
to this time. I don't think it ever operated on the 
Great American Circus. 



108 Fanckon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. But it was delivered to the Great American 
Circus? A. Yes. [136] 

Redirect Examination 

Q. By Mr. Combs: How much of a wardrobe 
was there at Baldwin Park, that is to say, for use 
by the circus? A. A 25 or 30-car show. 

Q. In other words, there was a vast quantity of 
wardrobe out there ? 

The Court: We don't care about the other words. 

Q. By Mr. Combs: A quantity that wasn't 
necessary for use on your show? 

A. That is right. 

Q. And the unusable portion was what you left 
behind at Baldwin Park; is that right? 

Mr. Schaefer: I object to that as the testimony 
of counsel. 

The Court: Yes. 

Mr. Combs : No I am not testifying. 

The Court : Let him testify. This is not before a 
jury, and I will instruct myself to disregard it, but 
it takes up time unnecessarily. 

Q. By Mr. Combs: The portion of the ward- 
robe that was [137] left at Baldwin Park was the 
unusable portion that you did not need for the 
Great American Circus; is that right? 

A. We left some at Baldwin Park. I couldn't 
say as to that. The wardrobe man took what he 
wanted. 

Q. And what he took was the usable portion, in 
usable condition; is that right? 

A. Yes; they used it. 



Hagenbeck-Wallace Shows Co. 109 

(Testimony of Paul Eagles.) 

Q. The kind of rope involved, on the main fall, 
which broke at Pasadena, was available for pur- 
chase here in Los Angeles, was it not ? 

A. Yes, 

Q. And, in fact, had actually been ordered from 
the hardware company? 

A. Well, I don't know. It was delivered in Po- 
mona. 

Q. But you had directed Daillard to order it 
from Inglewood? 

A. That is when I asked for it, yes. 

Q. And it could have been purchased imme- 
diately, and for immediate delivery, in Los An- 
geles; isn't that right? 

A. I don't know myself. I didn't make any in- 
quiries. 

Q. The stage that was carried by this Great 
American Circus, was it like all stages, or differ- 
ent from them ? 

A. Entirely different than any I knew. 

Q. In what respect? 

The Court: I understood that this wasn't a part 
of the paraphernalia. [138] 

Mr. Combs: On cross examination counsel 
asked — — 

The Court : So we need not have that. 

Mr. Combs: All right. 

Q. You related in your cross examination that 
the show was not ready for performance in Ingle- 
wood. In saying that, did you mean the equipment, 



110 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

or the personnel of the show, as distinguished from 

the equipment? 

A. The personnel of the performance was not 
ready. 

Q. That is what you meant when you referred 
to the show? A. Yes. 

Q. When you referred to a test that the cars 
had passed, who gave that test ? 

A. The railroads. We passed a test transferring 
from one railroad to another. We transferred from 
the Pacific Electric Railroad to the Santa Fe, to go 
to Inglewood. 

Q. And cars that were in unusable condition 
would not be passed f 

A. They won't use them. 

Q. The seats that were used in this show, were 
they passed by the seat inspector at Pasadena? 

A. Yes. 

Q. And at other places? A. Yes. 

Q. They all passed inspection of the local au- 
thorities on seating capacity, or the use of seats of 
that nature ? 

A. As to their strength and so on and so forth, 
yes. [139] 

Q. And safety factors? 

A. Yes, sir. 

Q. The condition of the lot in San Diego, can 
you relate a little more about that ? 

A. Well, it was a filled sandy lot, very soft. 

The Court: Where did that fill come from — 
dredged from the 



Hagenbeck-Wallace Shows Co. Ill 

(Testimony of Paul Eagles.) 

A. Yes, from the sea. They pump it back over. 
It was right across from the Marine Base. 

Q. By Mr. Combs: Was it a suitable or unsuit- 
able place for the performance of a circus ? 

A. Not very suitable. 

Q. What about the overloading of the wagons? 
Can you state to the court anything respecting that ? 

A. We loaded most of the paraphernalia of a 
25-car show on 33 wagons, or a 15-car show. 

Q. In other words, you were over overloaded at 
least 40 per cent; is that right? 

A. I don't know what percentage, but I think 
we were overloaded. We had a big top the same 
as a 25-car show. 

Q. You testified that you employed certain ex- 
perienced men as heads or bosses of certain depart- 
ments. Were those the only experienced men that 
were working on this show, as laborers or as equip- 
ment men? 

A. That list you have reference to that Mr. 
Schaefer [140] read over? 

Q. That is right. 

A. I think it was. The experienced ones were 
the only experienced ones, with the exception of a 
front door man and a sideshow manager, some- 
thing like that, but all of the labor was green. 

Q. Now, when the equipment was delivered in 
Inglewood to you, a great quantity of material and 
equipment was added to it by Panchon & Marco; 
isn't that correct ? A. That is right. 



112 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Q. Which increased your overloading, rather 
than decreasing it, at that point ; is that right % 

A. Yes; some big poles from over there that the 
Fanchonettes worked on, and wardrobe. [141] 

PLAINTIFF'S EXHIBIT No. A-2 

June 28, 1939. 
Mr. Marco, 

Fanchon & Marco, Inc., 
5600 Sunset Blvd., 
Los Angeles, Calif. 

Dear Mr. Marco : 

As per our telephone conversation this morning, I 
am inclosing herewith a copy of a statement which 
was made by a Stenographer in Mr. Henry Schaef- 
fer's office. 

This statement does not meet with my approval 
as it is just a recitation of events that happened 
while the Great American Circus was on the road 
and I believe it should be more complete if it is to 
be submitted to use in the settlement of a claim. 

At this time I want you to feel that no informa- 
tion will be withheld and that I will be glad to go 
over the facts at any time with anybody. 

With kindest regards, I am, 

Very Truly Yours, 

[Written in ink] 

Schaefer's Letter June 16. 

[Endorsed]: Filed Nov. 27, 1940. 



Hagenbeck-Wallace Shows Co. 113 

(Testimony of Paul Eagles.) 

Recross Examination 

Q. By Mr. Schaefer: You spoke of overloading, 
counsel says 40 per cent, You discussed this matter 
with Mr. Clawson and laid out the whole circus 
with him, didn't you? 

A. With Mr. Clawson and Mr. Daillard. 

Q. And at that time the items of equipment and 
the cars were selected, were they not ? 

A. With the exception of Inglewood, I wanted 
more cars and to distribute the loads over more 
wagons. 

Q. I am talking about Baldwin Park now. 

A. Baldwin Park. 

Q. The equipment was gone over and the num- 
ber of cars, isn't that right? 

A. That is true. 

Q. And you had 50 wagons out there at Bald- 
win Park, didn't you? [143] 

A. Yes, about 50. 

Q. And there were four trucks that Fanchon & 
Marco got that they used to carry equipment, in ad- 
dition? A. Yes. 

Q. Isn't it the custom of all circuses to employ 
some green labor from town to town ? 

A. Well, yes, organizing, and when they first 
open it is, some green labor. 

Q. And from town to town they take some labor? 

A. They usually have the same crews come back, 
and they add to them. 

Mr. Schaefer : All right. That is all. 



114 Fanchon & Marco, Inc., vs. 

(Testimony of Paul Eagles.) 

Redirect Examination 
Q. By Mr. Combs : How many laborers did you 
have on the circus, other than foremen ? 
A. Well, roughly, a couple of hundred 
The Court : A couple of hundred ? 
A. Yes. [144] 



CHARLES W. NELSON, 

Called as a witness in behalf of plaintiff, being first 
duly sworn, testified as follows : 

The Clerk: Will you state your name? 

A. Charles W. Nelson. 

Mr. Combs : We are calling Mr. Nelson for cross 
examination as an adverse witness. 

The Court: Proceed. We will find out where 
he is. 

Direct Examination 

Q. By Mr. Combs: What is your present em- 
ployment ? 

A. I am in business myself in the producing and 
booking of circus acts. 

Q. How long have you been engaged in that 
business ? 

A. Practically a period of 35 years. 

Q. Were you engaged in that business in con- 
nection with the Great American Circus in 1939? 

A. Yes, sir. At that time I was in association 
with Fanchon & Marco as the manager of their 



Hagenbeck-W allace Shows Co. 115 

(Testimony of Charles W. Nelson.) 
Fair Booking Department. 

Q. In that connection did you have the manage- 
ment of the booking of the Great American Circus? 

A. I did. 

Q. When did you first undertake your duties in 
that respect? 

A. I am not certain of just the definite length 
of time [145] prior to the opening of the show, but 
several months, I assume. 

Q. Relate how it occurred. 

A. Mr. Ralph Clawson came to me and told me 
that the equipment of the Hagenback & Wallace 
Show was on the market for sale or hire. 

Mr. Schaefer: I don't like to interrupt, but I 
am objecting to this examination as an adverse 
witness. I thought counsel was trying to find out 
whether he is entitled to do that. 

The Court: But I haven't told him that he was. 
I said we would find out. 

Mr. Schaefer: I understand the witness is going 
into the circus — ■ — 

The Court: He has a right to do that with his 
own witness. We will see whether he can cross ex- 
amine him, after we get started. 

A. Mr. Clawson suggested to me that the equip- 
ment was for sale or hire or rental, or any basis on 
which it could be disposed of, and I told him that 
I would bear that in mind, and if I found anybody 
that was interested I would contact him. In the 
course of conversation in the Fanchon & Marco 



316 Fmichon & Marco, Inc., vs. 

(Testimony of Charles W. Nelson.) 
office I happened to mention it to Mr. Bren and 
several associates, and they evidenced interest in it, 
and somehow or other brought it to Mr. Marco's 
attention. And Mr. Marco sent for me and discussed 
the matter, and asked [146] me to proceed and in- 
vestigate how it could be purchased. Originally Mr. 
Clawson set a figure of some forty some odd thou- 
sand dollars, and Mr. Clawson went into detail, and 
we negotiated with respect to the property, which 
initially was to be a 10-car show. And in the course 
of further negotiations it developed — Mr. Marco 
then took it out of my hands, after the contact had 
been made, and Mr. Daillard came into the picture, 
and from there on they contacted Mr. Marco, with 
Mr. John Ringling North, who was president of 
Ringling Brothers and Barnum & Bailey Shows, and 
in the course of events I was instructed to get the 
show together, which I did. That was the extent of 
my activities, just the performance proper. 

Q. Did you go out to Baldwin Park before the 
23rd of May? 

A. Yes, I did. I went out one day with Mr. Dail- 
lard, when the matter was first broached, and I sug- 
gested that some of the wheels of the wagons ap- 
peared to me as though they had been drying out 
in the sun, and Mr. Clawson said, "If they have, 
they will be replaced and put in perfect condition 
before they are moved off the lot." 

Q. When did this conversation take place? 

A. This was at least six or eight weeks before 
the show was opened. 



Hagenbeck-Wallace Shows Co. 117 

(Testimony of Charles W. Nelson.) 

Q. But you didn't go out there just before the 
show was opened ? [147] 

A. No, I didn't. 

Q. The next thing you had to do with the show 
was when it was put on at Inglewood 1 

A. Yes, that was my next contact with the show. 

Q. Did you make any observations with respect 
to the condition of the equipment at that time? 

A. For used equipment, it seemed to me it was 
in a condition that would be average. 

Q. Was it usable or unusable? 

A. I thought it was usable, from observation 
and my slight knowledge of what technical details 
are necessary for the production of a performance. 

Q. Excepting for the time the main fall broke 
in Pasadena, which was then chained to the bail 
ring, was there any time when the performers were 
unable to perform by reason of the condition of the 
equipment? A. Not to my knowledge. 

Q. And the same performers did perform after 
the men had chained the block and tackle to the 
bail ring in Pasadena? 

A. Yes, they gave the full performance, also the 
performance that night. 

Q. Did you employ George Singleton as an em- 
ployee of the circus? 

A. Yes; I employed him as boss canvas man 
with the show. 

Q. When? [148] 



118 Fanchon dk Marco, Inc., vs. 

(Testimony of Charles W. Nelson.) 

A. Oh, his duties were to start, as I recall it, 
approximately a week before the show opened. 

Q. When did you first employ him prior to a 
week before the show opened? 

A. I talked to him approximately about 10 days 
prior to that. 

Q. Did you have any conversation with him in 
that connection? 

A. Yes, I did. He called at my office a few 
times. 

Q. Who was present? 

A. Mr. Clawson was present one time, and I 
believe Mr. Daillard was at another. 

Q. What was said the first time by you, and 
what was said by Mr. Singleton? 

A. The exact details of the conversation I can't 
recall. But George told me then that he had a chance 
to go north with some show up in Canada and was 
waiting word from them then. I told him we were 
going out, and if he thought he would rather be 
with us, I thought it was advisable for him to wait 
around and get the job. 

Q. And what did he say? 

A. He agreed to do this. 

Q. Did you have any other conversation with 
him? 

A. Probably four or five days later he came and 
said he had transportation from this show in Can- 
ada, and that he was sending it back, to stay over 
and work with us. [149] 



Hagenoeck-Wallace Shows Co, 119 

(Testimony of Charles W. Nelson.) 

Q. Did you employ him at that time ? 

A. Yes, I did. 

Q. What was his pay? 

A. His salary was to be $75 a week. 

Q. Then shortly after that he went to work, 
did he? A. Yes. 

Q. Did he go to Baldwin Park? 

A. He went to Baldwin Park and did a little 
preparatory work there. 

Q. Did you direct him out there ? 

A. Yes. I told him to straighten up whatever he 
thought was necessary so we wouldn't lose time get- 
ting started when we decided to go. 

Q. Now, Mr. Nelson, did Mr. Singleton ever re- 
port back to you about the condition of the equip- 
ment out there? 

A. Well, George told me once or twice that he 
thought he needed a few pieces of rope here and 
there. And I said, "Well, that is just a minor detail. 
Mr. Clawson may have some on hand that he will 
give to you." 

Q. Where did you office during that time? 

A. With the Fanchon & Marco organization, in 
their own office. 

Q. Did you pay any rent there? A. No. 

Q. And you used their equipment ? 

A. Yes. [150] 



120 Fcmchon & Marco, Inc., vs. 

GEORGE SINGLETON, 

called as a witness in behalf of plaintiff, being first 
duly sworn, testified as follows: 

Direct Examination 

Q. By Mr. Combs : Your occupation, Mr. Single- 
ton? A. Boss canvas man. 

Q. Your residence? 

A. 210 North Main Street, Baldwin Park, Cali- 
fornia. 

Q. How long have you been engaged in the busi- 
ness of boss canvas man? A. About 40 years. 

Q. In that connection what experience have you 
had? 

A. I have always been a boss canvas man. 

Q. With what circuses, and during what years? 

A. I can give you back from 1902 or 1903. 

Q. All right. Start and list them. 

A. Well, there was Sun Brothers ; Sparks Circus 
for 20 years ; there was Young Buffalo, 5 years ; Al 
G. Barnes; Sells-Forepaugh ; Pawnee Bill; Hagen- 
back- Wallace ; Great American ; Lewis Brothers. 

Q. And other circuses? 

A. Cole Brothers, and others. 

Q. Many others? [153] A. Many others. 

Q. Did you have any connection with the Great 
American Circus at about the time of its exhibition 
to the public involved in this law suit ? 

A. Only in the mechanical department. 

Q. Will you state when you first undertook your 
connection or engagement with the Great American 
Circus ? 



Hagenbeck-Wallace Shows Co. 121 

(Testimony of George Singleton.) 

A. It was along the latter part of April when 
I first talked to Mr. Nelson. 

The Court: What year? 

A. 1939. He sent for me and hired me. I had 
contracted to go to Canada, and he advised me to 
cancel my contract and take their show. He said 
he would be ready in a few weeks. And the 18th 
of May he sent for me again and told me the show 
was ready, to have it in Inglewood the following 
Tuesday. That was on Thursday, and I had maybe 
five days to get it ready. So Thursday afternoon 
I went back and proceeded to get out the wagons 
and the paraphernalia. In the meantime I hired 
some men that was around the quarters, labor, and 
I even sent a man to Los Angeles to pick up what- 
ever men he could for me, and he brought out the 
next morning about 25 or 30 men that were abso- 
lutely no good, so I sent them all back. So then 
he picked up two or three men, such as assistants, 
sail makers, and the like, altogether experienced 
men. When the show moved on the lot at Ingle- 
wood I had about 16 men, that is, all told, and the 
[154] night we moved off all the new men walked 
away, and I had about eight men left to pack the 
show. It was 8:00 o'clock in the morning when we 
got the last wagons to the train. And the show was 
loaded and moved the same as any other time, load- 
ed light, ready to move, as it had been in the past, 
but we moved on the lot in Inglewood about five 
wagon loads of baggage and paraphernalia from 



122 Fanchon dc Marco, Inc., vs. 

(Testimony of George Singleton.) 
Hollywood, so that we had to overload all the 
wagons. The pole wagon, that had about three 
loads; it had about 25 tons, where it ought to have 
had about 10, and we packed all the wagons over- 
loaded leaving there. 

Q. That was due to the fact that you had re- 
ceived a quantity of paraphernalia at Inglewood 
that had not been transferred from Baldwin Park? 

A. Mr. Nelson, when he sent me out to quarters, 
to Baldwin Park, he wanted the show fitted out 
with a capacity of 5,000 people, and he wanted it 
loaded on 10 cars, and I told him it was impossible. 
And he said, "What is the nearest you can figure ?" 
And I said, "I will have to take time to figure." 
And I figured about 15 wagons. 

Q. Cars, you mean? 

A. 15 cars, that would take about 26 wagons. 
And when we finished loading the stuff we had it 
all loaded in good shape, except the motor power 
and trucks to move the show with. So we decided 
to — Mr. Nelson or Mr. Daillard rented four trucks 
that the Hagenback Show had formerly, [155] and 
that was the transportation we had. 

Q. They were not, however, rented from Hagen- 
back- Wallace, were they? 

A. No, sir. They was rented from the Pacific 
Freight Lines, the people that owned them then. 
And we had 10 elephants, and they helped, and four 
head of stock, and even at that we never had half 
enough motive power. We had a 30-car show load- 



Hagenbeck-W.allace Shows Co. 123 

(Testimony of George Singleton.) 
ed on 15 cars. I had handled the same show, with 
the same amount of material and stuff, with the 
Hagenback Shows, with 35 cars, and they allowed 
me 60 men, working men, besides the other help 
around, whereas I was moving this show, you might 
say, with 8 or 10 men. That is where the trouble 
come. And when we got to Pomona the show had 
just begun to click and move like it should move ; it 
was just beginning to move, and the railroad train- 
master told me that night, "You are going to quar- 
ters tonight," and I said, "That is impossible," 
and the next morning — that was about 11:30 or a 
quarter to 12:00 that night, and when I was called 
the next morning I was in Baldwin Park. So the 
next move was to unload the train and take the 
show back to quarters. And through Mr. Daillard 
— he says, "Just hold your men together the best 
you can." He was going to reorganize and finish 
these dates. So I did. And finally, a day or two 
after, I was called to Mr. Marco's office, and I went 
into his office, and he had a lawyer and stenograph- 
er waiting to take an affidavit from me with [156] 
relation to the paraphernalia, whereas I thought 
all the time that it was to re-open the show, and 
as soon as I found out what they was trying to do, 
I didn't have much more to say, and I walked out. 
So they mailed me an affidavit to sign, which I 
turned over — I refused to sign it, and turned it 
over to Mr. Clawson, and it was altogether wrong; 
some of the stuff that was in there I never even 



1 24 Fanckon & Marco, Inc., vs. 

(Testimony of George Singleton.) 
thought of. The next move I made, I went back 
to quarters, where I was in charge out there, my 
time ceased, and a man by the name of Dusty 
Ehodes finished putting the show away. And I 
think the second day after they paid off the work- 
ing men. Of course, I drew time for the time I 
was in their employ and gave a receipt for, I think, 
$122, for the time I was employed. Then I asked 
the cashier about by contract for the season. Well, 
he says I would have to take it up with the office. 
So I went out to find Mr. Nelson, and he was out 
of town or somewhere, and I spoke to someone else 
in the office, and "Well, you have to see Mr. Nel- 
son.'' So finally it went on and I tried two or three 
times, and I would have to see Mr. Nelson, and that 
is the way my case stood, and I was out of the 
picture. 

Q. When you went out to Baldwin Park when 
Mr. Nelson first employed you, w T hat did you do 
out there? 

A. I proceeded to get the wagons out and get 
material out, etc., chairs, poles, rigging, canvas; I 
proceeded to get the show together, to load it in 
wagons to go to [157] Inglewood. Then I had an 
order to put the show up in winter quarters. 

Q. Let me ask you about putting it up in winter 
quarters. Do you mean that you set it all up and 
tested it and tried it out % 

A. Do you know just exactly how much wagon 
space it would take to load 



Hagenbeck-W.allace Shows Co. 125 

(Testimony of George Singleton.) 

Q. Did you lay out the falls? 

A. I put the big top up. It was all up in the 
air, and they came out and stopped me and had me 
tear it down and load it to go to Inglewood. 

Q. When did you put it up ? 

A. I think it was Friday, finished it Friday 
night some time after dark. 

Q. That was the same equipment you loaded to 
go to Inglewood? A. Yes. 

Q. And the same equipment the Great Ameri- 
can Circus used? A. Yes. 

Q. And it was all up there, and you looked at it 
in the air, set up, before you left Baldwin Park? 

A. Yes, sir. 

Q. Did anyone else look at it with you? 

A. Why, Mr. Clawson went over some of this 
stuff, and Mr. Daillard was around there, and Mr. 
Marco was all around, [158] looking at the wagons, 
but I personally supervised the sorting and load- 
ing of all the stuff myself. 

Q. Did you look at the wagons before they left? 

A. Yes, I helped pick them out. 

Q. What was the condition of those wagons? 

A. Ordinarily speaking, they was in fairly good 
shape, good for the purposes used for. 

Q. Were they in such condition that they were 
suitable for the transportation of the circus? 

A. Yes. 

Q. They were, of course, second-hand or used 
equipment ? A. Second-hand. 



126 Fanchon & Marco, Inc., vs. 

(Testimony of George Singleton.) 

Q. Did you set the equipment up in Inglewood? 

A. Yes, sir, I did. 

Q. Did you have any difficulty in that connec- 
tion? 

A. Not a bit in the world, with the exception 
that we were shorthanded on labor. We had a 
whole day to do it. We had it all up in the after- 
noon. 

Q. Of the first day you arrived? 

A. Of the first day we arrived. But I would 
have had it up earlier than that, but we got in 
town that morning at about 5:00 o'clock and moved 
this stuff to the lot, and about 6:00 o'clock I had 
the lot all surveyed ready to go to work a little after, 
and I had orders not to move or put anything up 
until Mr. Marco came to the lot, through Mr. Claw- 
son. The understanding was, the contract was, they 
was [159] to pay, oh, I think it was — whether it 
was five or ten weeks in advance, for the rent of 
the stuff. I lost about two hours waiting there, and 
later on Mr. Marco, I think it was, or Mr. Nelson, 
and I can't say who else, Mr. Clawson, was all out 
in front of the lot, and finally Mr. Clawson come 
to me and said he had a wire from Mr. Eddy say- 
ing to turn over the stuff to the Great American 
Circus, and he was going ahead and put it up, and 
I lost two hours that morning waiting on that. 

Q. Then you did go ahead and put it up? 

A. Yes. 

Q. Now, did you have any trouble with the 
equipment at San Diego? 



Hagenbeck-Wallaoe Shows Co, 127 

(Testimony of George Singleton.) 

A. At San Diego the only trouble we had there, 
it was a lot below tidewater, and they had pumped 
a lot of sea sand in, and every time the tide would 
raise the water would come up, and every wagon 
that was pulled in off the highway would go right 
to the wagon bed. Finally we employed two cater- 
pillar tractors, 60 's or 80 's, I think they called 
them, or 80 or 90 horse power, but the very largest 
tractors that could be found, and it took two of 
them tractors to pull each and every one of the 
wagons, one at a time, and just drug them right 
through, putting them in position to unload. And 
those wagons stood up under that treatment, pull- 
ing in, and coming off we had four tractors coming 
off. And it took me from along about 2:00 [160] 
or 3:00 o'clock in the afternoon until 11:00 o'clock 
that evening to get the wagons on the lot, and we 
wasn't going to show until the next afternoon, and 
all the men was all worn out, and I sent them to 
bed. And they began work at daylight, and the 
show was all up, with the exception of the stage. 
We had a big caterpillar pushing dirt around, or 
trying to level it, and it took them all afternoon 
to get that stage straightened out. They had a man 
there from Los Angeles, from the Fanchon & Marco 
office, looking at it. It took them all afternoon. 
And they was supposed to give a rehearsal. And 
they were able to give the show the next day. 



128 Fanchon & Marco, Inc., vs. 

(Testimony of George Singleton.) 

Q. Did you have any trouble with the equip- 
ment at Santa Ana? 

A. Well, we got in there late, and the top was 
all ready to go up along about 1:00' o'clock, I sup- 
pose, along about 1:00 o'clock. And the wagon that 
brought the side poles for the big top, was loaded 
with plank and side poles, and it was necessary to 
have them in order to raise the big top, that had a 
hot box that held it up, and finally it got in along 
about 3 :00 o 'clock, and we was about ready to open 
the doors. They could have opened the doors at 
3 :00 o 'clock, or possibly earlier, but one side of the 
show was up, and the back end was ready, and they 
could open the doors at 3:00 o'clock. But for some 
reason, I couldn't say what it was, from the front 
they called the show off. They gave a [161] night 
performance. I sent the men to aid them, and came 
back and finished putting the short side grandstand 
at the front end up. 

Q. What was th£ reason for being late in ar- 
riving at Santa Ana from San Diego ? 

A. It was a long haul, about a 5-mile haul, in 
the first place, from the lot down, and it was along, 
I should say, about 1 :30 when we got to the train, 
and everything was off the lot then, and they had 
a bad place to load; it was uphill, and a curve in 
the track, and we had four horses and two elephants 
to load that heavy wagon, and finally I think they 
got a tractor to help load the train, and I went to 
bed about 2:00 o'clock. 



Hagenbeck-Wallace Shows Co. 129 

(Testimony of George Singleton.) 

Q. Had they left when you went to bed at 2:00 
o'clock? A. No. 

Q. What would you state was the cause of the 
late departure from San Diego? 

A. I couldn't say whether it was the fault of 
the railroad company. I think it was loaded be- 
tween 2:00 and 3:00 o'clock. But lots of times, 
whenever it is loaded, it is turned over to the rail- 
road company, and will stand for two or three hours 
at a time. 

The Court: He is surmising. 

Mr. Combs: That is right. 

Q. By Mr. Combs: Now, what was the cause, 
if you know, for the delay in getting the show up 
in Santa Ana? [162] A. I just stated. 

Q. The causes you have stated? 

A. Yes, about the wagon being late and we 
couldn't get the poles. 

Q. Can you state how long that wagon with the 
hot box delayed you, if you know? 

A. I couldn't say, because I didn't — « — 

The Court: Well, that ends it, if you don't 
know. 

Q. By Mr. Combs: You didn't observe it your- 
self? A. No, sir. 

Q. After the night show in Santa Ana what oc- 
curred ? 

A. It was loaded to go off the lot, I guess, around 
midnight, and I rode this same wagon we had 
trouble with in the morning. 



130 Fcmchon dc Marco, Inc., vs. 

(Testimony of George Singleton.) 

Q. What did you observe in that connection? 

A. We got about two blocks from the train, and 
this same wagon had another hot box. I said to the 
driver, "I will go and get a blacksmith and take 
the wheel off," and I brought him down, and it 
took him about 30 or 40 minutes to take the wheel 
off. 

Q. Did that delay the departure of the train 
any? 

A. No, that didn't. There were others behind 
that.. 

Q. There were others behind that that were not 
loaded until after that was loaded? A. Yes. 

Q. Did you get away in seasonable or early time, 
out of [163] Santa Ana, for Pasadena ? 

A. Well, I couldn't say, because after that wagon 
came I went to bed. 

Q. When did you arrive in Pasadena ? 

A. It w T as along about noon, or between noon 
and 1:00 o'clock. 

Q. At the railroad track? 

A. Downtown, yes. 

Q. How far was the lot from there ? 

A. About five miles. 

Q. Is that a short or a long haul ? 

A. An unusually long haul. 

Q. What was done when you arrived? 

A, I got off and got into a taxi and went to the 
lot and surveyed the lot, and waited there about, 
fully two hours, before I got the wagons. 



Hagenbeck-W&llace Shows Co. 131 

(Testimony of George Singleton.) 

Q. You finally got the wagons? 

A. I finally got one wagon, and then they com- 
menced to come. Then along, I think when I was 
raising the big top, a fall became fouled, and when 
I hooked the elephant to it, the rope which fouled 
in the block, it cut the rope off. That was the lead 
line on the ground, the one that goes through the 
snatch block. And so I had to splice this rope. 

Q. Did you do that personally? 

A. Yes. And proceeded to finish raising the can- 
vas on the big top. [164] 

Q. Then what occurred, if anything? 

A. Well, there was nothing particularly oc- 
curred after that. It was very late then, and it 
must have been after 2:00 o'clock. So I was ready 
for the doors along — we could have opened the 
doors at 3 :30, because I had all the front side lum- 
ber grandstand back in there, and we could have ad- 
mitted the people. I sent all my men to eat, and 
in the meantime Mr. Eagles came in to me and says, 
"The show is off. They called it off for the after- 
noon." 

Q. About what time was that? 

A. Along about 4:00 o'clock. 

Q. Was the tent up at that time? 

A. The tent was up, and the inspector had been 
in and inspected it and put his O. K. on it. 

The Court: You say, "I spliced the rope." 
What was the condition of the rope where it sepa- 
rated? 



132 Fanckon & Marco, Inc., vs. 

(Testimony of George Singleton.) 

A. The rope was in usable condition. I bought 
the rope myself and had been using it. I had been 
handling this property since 1937, and had replaced 
new rope from time to time, and rebuilt seats and 
poles, and whatever was necessary. 

The Court: Well, you have answered the ques- 
tion. 

Q. By Mr. Combs: How long did that splicing 
of that rope take you? A. About 15 minutes. 

Q. How long did the breaking of that rope de- 
lay the [165] putting up of the tent ? 

A. Not more than 25 minutes, 

Q. About 25 minutes'? A. Yes. 

Q. After Pasadena you went to Pomona ; is that 
correct? A. Yes, sir. 

Q. Anything out of the ordinary or unusual oc- 
cur there? 

A. No, sir. We got in there early in the morn- 
ing. And this overloading stuff — we had three of 
Mr. Eagles' trucks, which took this extra staging 
and poles and a lot of extra baggage and stuff that 
we didn't have room for on the wagons — they took 
that across country in the trucks, and got in there 
early, about 7:00 o'clock in the morning, and the 
show would have been ready at noon, but that stage 
was holding it back. 

Q. You observed that stage being erected, I sup- 
pose ? A. Yes, 

Q. How long did it take, approximately, to erect 
that stage? 



Hagenbech-Wallace Shows Co. 133 

(Testimony of George Singleton.) 

A. Well, never less than three hours, sometimes 
longer. It depends on what kind of ground they 
had. 

Q. How long was the longest time you recall? 

A. At any time I don't think it was over three 
and a half or four hours. 

Q. Was that an unusually long time for the erec- 
tion of the stage? [166] 

A. 30 minutes — they should put it up in 30 min- 
utes. 

Q. Is that about the allotted time allowable for 
such a purpose in connection with good manage- 
ment of a circus? A. Yes. 

Q. In connection with the labor involved in this 
circus, did you ever get a full crew of men? 

A. No, sir. 

Q. What was the most men you ever had in your 
department ? 

A. At one time I think it was 20 men, and I 
had them in the morning, and in the afternoon I 
had about 10 or 12. The labor agent would bring 
them in in the morning, and they would eat two or 
three meals, and in the evening they would be gone. 

Q. Were they green or experienced help? 

A. Well, I will tell you just who they were. He 
went down on Fifth Street, on Skidrow, and em- 
ployed drunks and everything else up there that did 
not know what it was all about, and they wasn't 
in good condition to work, in the first place, and I 
told the labor agent 



134 Fanchon & Marco , Inc., vs. 

(Testimony of George Singleton.) 

The Court: Never mind. How many does the 
show require? 

A. Ordinarily a show of that size, 60 men would 
be a full crew. 

The Court: And you had how many? 

A. At no time over 20 men. [167] 

Q. By Mr. Combs : You employed some boys, of 
course; is that correct? A. For tickets, yes. 

Q. And they were inexperienced? 

A. They were Italians and Japs and so forth. 

Q. I want to ask you a question. Were the 
wagons involved in this show in good condition and 
ready for use at the time they were delivered at 
Inglewood ? 

A. They was all picked out and loaded? 

The Court : Answer the question. 

A. Yes, sir ; yes, sir, they were. 

Q. By Mr. Combs : Is that also true of the tent 
rigging, blocks, falls and chairs? 

A. I inspected them myself. 

Q. The answer is yes? A. Yes, sir. 

Q. Is that also true of the train flat decks and 
runs? 

A. I couldn't say. That was out of my depart- 
ment. 

Q. Did you inspect the wardrobe ? 

A. That was out of my department. 

Q. Did you inspect the calliope? 

A. It was out of my department. 



Hagenbeck-Wallace Shows Co. 135 

(Testimony of George Singleton.) 

The Court: You inspected everything in your 
departments A. Yes, sir. 

The Court: And you have told us about it? 

A. Yes, sir. [168] 

The Court: Well, that ends it. 

Mr. Combs : Just a moment. I think that is all. 

Q. By Mr. Combs: Before you left Baldwin 
Park did you have any discussions or activities in 
connection with the making of a list of stuff neces- 
sary for the production of this circus ? 

A. Yes, I made a list out and gave it to Mr. 
Clawson, the stuff we were supposed to use. 

Q. That was when you first went out there? 

A. It was after I got the stuff picked out. 

Q. About what day was that? 

A. That was on Friday, the 19th. 

Q. And you handed Clawson a list of the stuff 
you wanted at that time? 

A. The stuff I was going to use, that belonged 
to the Hagenback- Wallace Shows. 

Q. Do you know where that list is now? 

A. Well, all I could say, Mr. Clawson — — 

Q. You don't know? A. I don't know. 

Q. You never saw a copy of it? 

A. No, sir. 

Mr. Combs: That is all. 

The Court: Cross examine. [169] 



136 Fanchon & Marco, Inc., vs. 

RALPH J. CLAWSON, 

called as a witness in behalf of plaintiff, being first 
duly sworn, testified as follows: 

Direct Examination 

Q. By Mr. Combs: Mr. Clawson, what is your 
present occupation? 

A. With the Amusement Corporation of Amer- 
ica. 

Q. Is that a circus ? 

A. Circus and carnival combined. 

Q. How long have you been engaged in the busi- 
ness of — or in what capacity are you with them? 

A. Manager. 

Q. Have you heretofore been engaged in the 
capacity of manager of circuses? 

A. Yes, sir. 

Q. For what length of time ? 

A. Since 1929. 

Q. Relate your experience to the court in con- 
nection with your activities for circuses. 

A. With circuses, I have been what they call a 
lot superintendent, four years, 24 hour man for the 
show. After that I became assistant manager of 
John Robinson's Circus: later assistant manager of 
Hagenback- Wallace ; and then I became manager 
and assistant manger of the Ringling Show. Then 
I was transferred to Baldwin Park, [177] Califor- 
nia, as manager of winter quarters of the Hagen- 
back- Wallace Circus. At the present time I am 
with the Amusement Corporation of America. 



Hagenbeck-Wallace Shows Co. 137 

(Testimony of Balph J. Clawson.) 

The Court: What is your present title and em- 
ployment ? A. Manager. 

The Court: For whom? 

A. Amusement Corporation of America. 

The Court: Proceed. 

Q. By Mr. Combs: Now, did you have some 
occasion to contact Fanchon & Marco, or their rep- 
resentative, respecting the Great American Circus? 

A. I did. 

Q. When was that, first? 

A. That was along in the first part of May, I 
would say, in 1939. 

Q. Whom did you contact on that occasion? 

A. Charles Nelson. 

Q. What was the occasion? 

A. Trying to rent or lease property from them. 

Q. Hagenback- Wallace ? A. Yes. 

Q. Where did you first contact him? 

A. In the office on Sunset Boulevard. 

Q. Of Fanchon & Marco? A. Yes, sir. 

Q. Who was present? [178] 

A. The first few visits we was by ourselves. 

Q. What was said by you and what was said 
by Mr. Nelson? 

A. I told him we had properties for rent, con- 
sisting of elephants and circus equipment, all ex- 
cepting canvas, and Mr. Nelson said they would 
probably be in a position to rent some of this stuff 
the coming year for a circus, and so I told him I 
would make him a deal any time he was willing to 



138 Fanchon & Marco, Inc., vs. 

(Testimony of Balph J. Clawson.) 

go ahead. He called me back one day and said, "Go 

ahead and make up a list." 

Q. How long was that 

A. From two to three weeks, I would say; two 
weeks, I would say. 

Q. What conversation did you have with him 
at that time? 

A. Well, we talked mostly about equipment, how 
big a show he would want, and what equipment he 
would need, and so forth. 

Q. Just the two of you present? A. Yes. 

Q. Where did the conversation take place? 

A. That was on Sunset Boulevard also. 

Q. And that terminated without any definite ar- 
rangement being made? A. Yes. 

Q. Did you have any conversation after that? 

A. Mr. Daillard was the next. 

Q. Where was that? [179] 

A. At Fanchon & Marco's office. 

Q. About how T long before the date of the con- 
tract involved in this case ? 

A. I would say a week, approximately. 

Q. That was, then, approximately the 15th of 
May, 1939? A. Somewhere along in there. 

Q. Who was present at that time ? 

A. Mr. Daillard was all, that day. 

Q. Just he and you? A. And Mr. Nelson. 

Q. What was the conversation? 

A. We was trying to arrange a show, and they 
wanted a 10-ear show, but they wanted seating 



Ragenbeck-Wallace Shows Co. 139 

(Testimony of Kalph J. Clawson.) 
capacity of 5,000 seats. And we explained to them 
that it would be impossible for them to load and 
carry that much equipment on 10 cars. So they de- 
cided that they would take their people and feed 
their people at hotels or cafeterias, and they 
wouldn't need the cook house, so that would elimi- 
nate a lot of train space and wagon space. Later on 
they decided they would have to have a cook house 
and they would feed them on the lot. So it ended 
that day. And the next morning Mr. Bren — I met 
him, he came into the picture, and we started to 
deal then. The New York office did most of it 
through long distance telephone. 

Q. You had no authority at that time to make a 
contract with Hagenback- Wallace, did you'? [180] 

A. No, not with the consent of the New York 
office. 

Q. In fact, in this case the contract did come out 
of the New York office on the 22nd of May f 

A. Yes, the 22nd or 23rd. 

Q. When it was executed? A. Yes. 

Q. You had that conversation about the 15th, 
and then you had a conversation the next day with 
some representative of Fanchon & Marco % 

A. Yes, we had conferences every day, two or 
three times a day. 

Q. Right up to the time of the delivery of the 
stuff at Inglewood? A. Yes. 

Q. Who were those conferences mostly between, 
Mr. Clawson? 



140 Fanchon & Marco, Inc., vs. 

(Testimony of Kalph J. Clawson.) 

A. I had never met Mr. Marco until we started 
to deal with the New York office, and then he 
came in. 

Q. What was the occasion for your meeting 
Marco ? 

A. Mr. Marco said that he thought I didn't want 
to rent the property and I was holding up the con- 
tract. 

Q. When did this take place % 

A. I think that was on a Wednesday before we 
started to work on Friday. 

Q. That was about — 

A. This was a couple of days before the con- 
tract. [181] I asked to meet Mr. Marco, and we had 
a meeting in his office, and I told him that we would 
wire the New York office saying that I approved 
of it. Mr. Marco sent the wire out of his office. And 
then later on in the day they started further calls 
to New York, and I think the contract was exe- 
cuted and made from there, or with the representa- 
tives in New T York, and they telephoned me from 
New York what equipment I should give them. 

Q. Did they give you in their telephone conver- 
sation a list of the equipment contained in the con- 
tract ? 

A. They gave me a list, and the next morning 
they came through with a wire confirming what I 
should give, and the contract came through a couple 
of days later. 



Hagenbeck-Wallace Shows Co. 141 

(Testimony of Kalph J. Clawson.) 

Q. What were you doing out at Baldwin Park 
during this time? 

A. I had charge of the winter quarters, looking 
after rental of the property and trying to secure a 
livelihood for us. 

Q. Was anyone out there doing anything with 
relation to this Great American Circus ? 

A. At that time ? 

Q. Yes. A. Mr. Eagles was there. 

Q. From about the 19th of May on? 

A. I would say the 19th, yes, and Mr. Daillard, 
both was there. They w T ould come early in the morn- 
ing and stay [182] late at night. 

Q. What did they do? 

A. They selected property, and we would look 
over equipment, and we would decide on one wagon, 
and of course we would figure the space, and we 
was all working together. Then we changed the 
wagon lists around, and spent considerable time 
figuring what wagons we would have to have to 
hold the equipment. 

Q. And you finally delivered six or seven wagons 
in excess of the number called for in the contract? 

A. Yes. I think, if I remember right, it was 
nine wagons over. At the last moment Mr. Daillard 
— previous to that Mr. Daillard had hired wagons 
from a firm named Potter, in Alhambra, what was 
known as the Springer Wagon, a wagon for the 
light plant and two canvas wagons, which was for- 
merly the property of Hagenback- Wallace, and this 



142 Fanchon & Marco, Inc., vs. 

(Testimony of Balph J. Clawson.) 
party out there bought the property. 

Q. It didn't belong to you at that time? 

A. No. So the day before we was supposed to 
leave Mr. Potter cancelled his agreement with Mr. 
Daillard and me also. So we had to get extra wa- 
gons and rearrange our whole load then. So we 
gave them additional wagons. 

Q. You did that without authorization from New 
York, on your own motion ? 

A. Yes, on my own motion. 

Q. And on their request? [183] 

A. On their request, 

Q. And that amounted to approximately nine 
additional wagons? A. Yes. 

Q. The contract did not call for a cook house? 

A. No. 

Q. And you just gave them that of your own 
motion? 

A. Yes, they wanted to take it, like the ladders, 
the swinging ladders; I had no contract for that. 

Q. At their request? 

A. Yes, on the request of Mr. Daillard and Mr. 
Eagles. 

Q. Now then, you did a lot of work around there 
during that week ? 

A. Night and day, yes, sir. 

Q. To get this stuff in condition? 

A. That is right. 

Q. Did you do any painting of the wagons? 

A. Yes. 



Hagenbeck-Wallace Shows Co. 143 

(Testimony of Kalph J. Clawson.) 

Q. You painted in " Great American Circus", 
instead of whatever was on there before ? 

A. We lettered all the wagons " Great Ameri- 
can Circus," and we hired a company in Baldwin 
Park to come up and spray the wagons and letter 
them " Great American Circus." We also painted 
the train, the cars, which said Hagenback & Wal- 
lace. We went over it for them in color. The color 
was selected by Mr. Eagles. [184] 

Q. You spent a considerable sum of money in 
that connection? 

A. I would say on paint alone we run consider- 
ably better than $500. 

Q. Now, you had an opportunity to examine 
these wagons yourself, did you not? A. Yes. 

Q. And you knew of their condition? 

A. Yes. 

Q. With respect to the same, and as to the 20 
wagons that w T ere contained or referred to in the 
contract, when they were delivered over at Ingle- 
wood, California, were they in good condition and 
ready for use? 

A. They was in usable condition and could be 
used, yes. 

Q. And they were used wagons? 

A. They were used wagons, yes, had been on 
the road. Some of the wagons I helped build my- 
self. 

Q. Was that also true of the condition of the 
tent rigging, blocks, falls and chairs? 



144 Fanchon & Marco, Inc., vs. 

(Testimony of Kalph J. Clawson.) 

A. It was in good condition, but had been used. 

Q. Was that also true of the train flat decks 
and runs? 

A. There was one or two places on top of one 
of the decks was a little bit bad, so Mr. Daillard 
and I, we looked it over out at Baldwin Park, and 
he said, "Well, we will get that over in Inglewood," 
and we fixed that up down at San Diego, and when 
the report on the train come from the [185] Pacific 
Electric or the Santa Fe, they come out and give 
us a clearance on it. 

Q. Inspected it and tested it for operation? 

A. Yes. And I am pretty sure Mr. Daillard 
was there, because he called me — I was in Mr. Gar- 
rett's office downtown, and Mr. Daillard telephoned 
in to me that the inspectors would like to have me 
out there when they made the inspection. 

Q. What was the condition of the calliope when 
it left Baldwin Park? 

A. I think it was usable. 

Q. What occurred with relation to the calliope 
when it was attempted to be moved from the wagon 
onto the bandstand? 

A. It dropped. We had property boys that 
dropped the calliope. 

Q. After that had been taken off of the train 
at Inglewood? 

A. Yes. This calliope rode in a large wagon, 
and the back end had a large endgate, and they 



Hagenbeck-Wallace Shows Co. 145 

(Testimony of Ralph J. Clawson.) 
had these boys there, and they put them on unload- 
ing this, and they dropped this piece of equipment. 

Q. And it did not play for the rest of the term 
of the circus? A. No. 

Q. Did you know anything about the elephant 
howdahs ? 

A. Yes. We had altogether at Baldwin Park 
12 howdahs, [186] and there was four or five of 
them over at M. G-. M. Studio, and they was making 
a picture over there — I think the name was "Lady 
of the Tropics,'' with Hedy Lamarr. So after the 
howdahs went over there, Mr. Rogers, the art di- 
rector, decided that they would build their own 
howdahs, something more elaborate, and so all the 
howdahs was laying over there, and the elephants 
that Mr. Eagles and Mr. Daillard selected did not 
carry howdahs anyway. 

Q. Was anything ever said about these elephant 
howdahs ? 

A. They asked for them, said just have them 
around in the back here, but they wanted the larger 
elephants. 

Q. Did they ever ask that they be delivered'? 

A. Yes. 

Q. When was that? 

A. I believe in Inglewood, and Mr. Eagles said, 
"I will go out and pick them up in one of my 
trucks, at the studio." 

Q. And as far as you were concerned, you were 
not directed to get those howdahs? 



146 Fanchon dc Marco, Inc., vs. 

(Testimony of Kalph J. Clawson.) 

A. By nobody, no, sir. 

Q. How many howdahs were included in that 
contract ? 

A. Well, you see — I will explain that to you. 
We have 23 elephants, and first Mr. Nelson selected, 
he selected the elephants, and said he wanted those 
elephants, and we had to give him smaller elephants 
to go in our supposed number, so he selected those 
elephants, and you have to break an elephant to car- 
ry a howdah, and Mr. Daillard [187] was out there 
and figured, "We will have to have a lot of power 
around the show, so we had better take those bigger 
elephants, and just so we have blankets for them 
it will be all that is necessary." 

Q. They would not carry howdahs ? 

A. No. 

Q. They were not trained to do that? 

A. No. 

Q. Did you have an opportunity to examine the 
wardrobe? A. I did, yes. 

Q. What was its condition f A. Usable. 

Q. Usable? A. Yes. 

Q. What was the condition of the sleeping 
cars? 

A. The sleeping cars had mattresses, and they 
was clean and in good condition. 

Q. But respecting the sheets, pillow cases and 
curtains, have you anything to relate to the court 
in that connection? 



Hagenbeck-Wallace Shows Co. 147 

(Testimony of Ralph J. Clawson.) 

A. They wasn't fully equipped on those, not with 
sheets and blankets, which wasn't customary, ac- 
cording to our contract; they wasn't supposed to 
be equipped. 

Q. Were you supposed to do that*? A. No. 

Q. In the show business is it customary to rent 
the cars equipped with blankets, sheets and pillow 
cases? [188] 

A. No, that is not the custom. I am going to 
illustrate. Last week I rented a car from Del Mc- 
Coy, and all we had in it was just a mattress, and 
we never have blankets or sheets or pillow cases. 
We have the pillow T s, but not the — we furnish pil- 
lows and mattresses only. 

Q. And in the circus business that is generally 
understood? A. Yes, sir. 

Q. You arrived with all your equipment at 
Inglewod; is that correct? A. Yes. 

Q. Of course, exclusive of the elephant howdahs 
referred to? 

A. I think that is what w T as missing. 

Q. Nothing was said about that at Inglewood? 

A. Not a word. 

Q. Now then, what occurred when you arrived 
there, as far as you were concerned?' 

A. After the equipment arrived there that morn- 
ing I wired New York for advice, owing to the terms 
of the contract — I didn't pay much attention to the 
erecting of the equipment. 

Q. It was all erected, however? 



148 Fanchon & Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 

A. Yes, all put up there. So they told me I was 
supposed to get another payment down at Ingle- 
wood. 

Q. How much? [189] A. $2500. 

Q. Did you get it? A. I did not. 

Q. Did you have any conversation with Marco 
about it? A. Mr. Marco and Mr. Daillard. 

Q. What was that conversation? 

A. I asked them, after the opening performance, 
about the money, so Mr. Marco says, "Yes!, we will 
go out to the wagon and get it." So we started, and 
him and Mr. Daillard went in conference, and they 
said, "We will give it to you in San Diego." 

Q. Was there any further conversation about 
it then? A. Not that night. 

Q. Did you have any conversation at the same 
time about the notes? 

A. The notes, they said, "Yes. we will give you 
the notes. Come in the wagon and we will give them 
to you when we get to San Diego in the morning." 

Q. What else transpired prior to the lime you 
left Inglewood, respecting you and Fanchon & 
Marco ? 

A. Mr. Eagles and Mr. Daillard, they came over 
and asked me to help Mr. Nelson put the perform- 
ance together. 

Q. Do you know what the occasion for that was ? 

A. They was having some trouble getting the 
acts in the big show. 



Hagenoeck-Wallace Shotvs Co. 149 

(Testimony of Ralph J. Clawson.) 

Q. That was in the matter of the production of 
the show [190] itself'? 

A. The performance, the production, yes. 

Q. Will you relate just what that trouble was? 

A. Mr. Marco came to me and said, " I have had 
everybody else around here this morning trying to 
get me a rehearsal/' and he said, 'Can you get me 
a rehearsal/' and I said; "I will be very glad to 
help you." So we started in and got a skeleton re- 
hearsal, about 35 or 40 minutes. And then Mr. 
Marco and I personally rehearsed the balance, with 
his suggestions. So he said, "I would like to have 
you go with us and help us put this performance 
on each day, the act." 

Q. What did you say to that? 

A. I said, "All right, I will try to make it." 

Q. Was anything said respecting your salary? 

A. Yes. He said they would give me $50 a week. 

Q. In what capacity? 

A. Equestrian director. 

Q. What did you say then? 

A. I told him that I was on the pay roll of the 
people in New York at that time, and Mr. Eagles 
said it was all right, "You will have additional ex- 
pense, anyway," so I said I would accept it. 

Q. From that time on you acted as ringmaster? 

A. That is right. 

Q. Until it closed? A. Yes. [191] 

Q. Did you receive your payments? 

A. I did. 



150 Fanckon & Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 

Q. $50? 

A. Yes, sir, that is, right from Baldwin Park. 

Q. From Roy Wolff? A, The treasurer. 

Q. The treasurer? A. Yes. 

Q. After the show was closed, in Baldwin Park? 

A. Yes. 

Q. As soon as you undertook the job as ring- 
master, the performance went off in Inglewood? 

A. Yes, sir. 

Q. And you went to San Diego? A. Yes. 

Q. And what transpired there? 

A. At San Diego one of the conditions — I re- 
member the road w T as in very bad condition, and Mr. 
Eagles went ahead with the train, and I drove my 
car through, and I think I got in town at 6:00 or 
7:00 o'clock at night, just after the day they closed 
in Inglewood, and there was a lot of sand there, and 
so Paul said, "We are going to work until it gets 
good and dark and put the show up in the morning." 

Q. Was that done ? A. That was done. 

Q. Did you see Mr. Marco down there? [192] 

A. I see Mr. Marco the following day, yes. 

Q. Did you have any conversation respecting 
the $2500 and the four notes? A. Yes. 

Q. What was that? 

A. Mr. Marco — we was sitting in the seat to- 
gether, and he said, "Yes, we are going to give it 
to you." He said, "Do you know anything about 
our contract, how far up north we are going?" And 
I said I had no information of this contract. And 



Hagenbeck-Wallace Shows Co. 151 

(Testimony of Ralph J. Clawson.) 
he said, "We are not very well pleased with some 
of the contracts we have made up north." I guess 
he was referring to the northern part of the state. 
He said, "We practically give the show away up 
there some places," and he said, "I doubt if this 
thing will ever pay. We can't take in any money 
under these conditions." And so I asked for my 
$2500 again, and he told me, he says, "We will give 
it to you," and, well, I didn't get it. 

Q. Did he say when? 

A. He didn't say, Mr. Marco, until Pasadena. 
The rest of my conversations was always with Mr. 
Daillard. He was supposed to be the executive chief. 

Q. The next conversation, where was that, with 
Daillard? A. That was in Santa Ana. 

Q. When? A. Following after San Diego. 

Q. What was said? [193] 

A. I said, "I must have that money to send in 
to New York." And so Mr. Daillard said, "Well, we 
have spent quite a bit of extra money repairing 
some of this equipment," and he said, "We will 
take that out of the first payment." I said I wasn't 
promising to do that. So at Pasadena, being a holi- 
day, things was more or less confused over there, 
and Mr. Marco was there in the afternoon, and I 
think I talked to him a little while. 

Q. At Pasadena? A. At Pasadena. 

Q. Then that Daillard conversation that you just- 
related was at S'anta Ana, or, first, the Marco one 
at San Diego? 



152 Fanchon & Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 

A. San Diego, Daillard, yes. 

Q. And Pasadena? 

A. And at Santa Ana I talked to Mr. Daillard 
about the money, but I didn't ask Mr. Marco for it 
at Pasadena, and the next day the show closed. 

Q. You had no conversation at Pasadena? 

A. No. 

Q. Did you say anything at Pomona? 

A. I asked Mr. Daillard for it three times dur- 
ing the morning and afternoon performances. 

Q. What did he say? 

A. He said, "We are going to straighten this 
up right away in New York." [194] 

Q. That was the last conversation? 

A. I wired our New York office for information 
that afternoon, and that night the show closed. 

Q. Did you ever make any further demand on — 

A. I went back to see Mr. Marco at his office 
the next day after the show closed, and talked to 
him about it some. 

Q. What was said by you and by him? 

A. I asked him, "What are we going to do 
about the payments, Mr. Marco?" And he says, "I 
don't know." He says, "The show is not on the 
road," and we had a lot of trouble, and there was 
some talk of the show reorganizing, and of course 
it never materialized. 

Q. Did he offer you a job if they reorganized? 

A. Yes, he talked — said he would like to have 
me. 



Hagenbech-Wallace Shows Co. 153 

(Testimony of Ralph J. Clawson.) 

Q. The show went off on schedule at San Diego. 

A. Yes. 

Q. And at Santa Ana it was delayed, or did you 
miss the matinee? 

A. At Santa Ana I think the matinee was called 
off by the management. 

Q. Did you have occasion to observe the reason 
for the calling off of that afternoon performance? 

A. I didn't, really. Over there it seemed to be a 
delay about getting the equipment up on the lot. 
They was moving around rather slow and seemed 
short-handed. I would say that was the cause of it. 

[195] 

Q. What can you state about the experience of 
the help? 

A. Well, the heads of departments was very 
capable men. 

Q. How about the general rank and file of the 
workers ? 

A. Well, they was a very poor class of men, 
much more unusual than you see around a circus. We 
most generally hire young boys, around about 25 
or 30, and they do all right, and we had men more 
like 50 or 60 years of age, and people were going 
and coming over there 

Q. What about the condition as to loading of 
the circus? Did you have sufficient wagons to han- 
dle all equipment? 

A. I don't think they did until they took on ex- 
tra equipment in Inglewood. 



154 Fanchon dc Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 

Q. How much extra equipment did you take on 
there ? 

A. We had to make a whole wagon complete 
for the Fanchonettes. They have got a big involved 
act. I think there were 24 girls, and every one 
carried a lot of stuff, and the stage came on there, 
and we had all the trunks that come in for those 
big acts, that never come to Baldwin Park. Most 
all that was added. 

Q. Did that result in overloading? 

A. To a certain extent it did, yes. 

Q. In Pasadena did you have occasion to ob- 
serve the working of the main fall there ? 

A. I noticed they got the line fouled once or 
twice there. [196] 

Q. There were elephants pulling that line? 

A. They pulled the cable. The cable goes through 
the block, and sometimes the cable will foul. 

Q. Has an elephant sufficient strength or power 
to pull a rope like that in two? 

A. An elephant don't know his strength when he 
starts to pull. 

Q. You believe they could pull the main fall in 
two, though? 

A. Yes, I believe he could, very easily. 

The Court: You say an elephant is the motive 
power ? 

A. That pulls the fall up, your Honor? 

The Court: And the rope got fouled? 

A. It got fouled in a block. 



Hagmbeck-Wallace Shows Co. 155 

(Testimony of Kalph J. Clawson.) 

The Court: Where did it tear, between the ele- 
phant and where ? 

A. B: broke once right on the No. 1 bail ring, 
and going through the block there it got fouled. 

The Court: And broke right at the blocks 

A. I think so. It is pretty hard to tell, but that 
is the way I think. And they tie that right onto the 
bail ring. 

Q. By Mr. Combs: That was chained on after 
the fall broke at Pasadena'? 

A. Yes. 

The Court : Are you through f [197] 

Mr. Combs: Almost. Just a moment, if your 
Honor please, 

Q. By Mr. Combs: Then you went to Pomona, 
after Pasadena? A. Yes. 

Q. Did the show go on on schedule there 1 

A. I didn't keep the time on the performances, 
but I think the performance started along about 
3:00 o'clock. I wouldn't want to say. 

Q. It went on more or less on schedule? 

A. Yes, sir. 

Q. You are often 20 minutes to a half hour late, 
aren't you? 

A. On some days. Of course it doesn't occur 
every day, but it happens. The first part of the sea- 
son you are more or less late in arriving and get- 
ting your equipment in shape. 

Q. And equipment, that is to say, circus wagons, 
quite frequently have hot boxes on the road? 



1 56 Fanchon & Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 

A. In recent years it has. All this equipment 
was built back along to be drawn by horses, all old 
iron-tired wagons and boxings and axles in there, 
and when you use too much power, in place of go- 
ing at four miles an hour, probably the trucks will 
run up to ten or twelve miles. 

Q. Or maybe more than that? 

A. Yes, maybe. With the Great American Show 
we [198] didn't have our own drivers. They hired 
local trucks. 

Q. Did they run faster than the four or five 
miles an hour that such wagons will take? 

A. Yes, considerable. They probably run 15 or 
20 miles. 

Q. In this Great American Circus*? 

A. Yes. I stopped them several times. I think 
Mr. Daillard and I were standing out there, and 
stopped two drivers for going out of the lot too fast. 

Q. And that would result in hot boxes? 

A. Yes, sir. Of course, that was a long haul. It 
is quite frequent on a show as big as the Ringling 
Show, to have one or two hot boxes a day. If any 
of them get hot, we call a greaser, and they go 
around and grease those wagons, and sometimes they 
may skip a wheel or something, and whenever you 
get the motive power to it you always have this 
trouble. 

Q. At Pomona did there occur anything with 
relation to the Actors' Federation of Labor union, 
that you observed there? 



Hageribeck-Wallace Shows Co. 157 

(Testimony of Ralph J. Clawson.) 

A. Yes. A representative of the- Actors' Associa- 
tion pulled out the Fanchonette out of the show, and 
I think it was Walter Ghiice, and he blows the or- 
ganization and his act, and I am pretty sure the 
band was union and said they would have to go 
out also. 

Q. By " pulling out" you mean go on a strike? 

A. No, just pull out from working. We wasn't 
union. [199] We wasn't an organized show. 

Q. That actually occurred within your knowl- 
edge at Pomona? A. Yes. 

Q. So that you lost Guice, the band and the 
Fanchonettes ? 

A. We would have lost them if we had went 
on at all. 

Q. And did you go back to Baldwin Park the 
next day? A. That is right. 

Q. Respecting the runs on the flat cars, were 
they in good or bad condition? 

A. The runs was in good condition. 

Q. Do you know that of your own knowledge ? 

A. I know that of my own knowledge, because 
they was brand new runs made in 1938, 38 inches 
wide. It was very good equipment. 

Q. Did you observe the fact that the pole wagon 
jumped the runs in Santa Ana? 

A. No. I wasn't there. 

Q. When a car or wagon jumps the runs, in 
circus parlance, what does that mean? 



158 Fanchon <Jc Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 

A. That means sometimes that your deck polar, 
the wagon itself, in other words, it is fastened to the 
wagon, and a man walks along like this and guides 
this pole, and sometimes he might get it to the 
edge, and when he makes a stop, he steps to one side, 
and the pole might jerk a little. [200] 

Q. And it just runs off the runs ? 

A. Yes. It is not very often that it happens. And 
this boy is apt to step aside, and one wheel will go 
off the run, because it can run off. [201] 

Cross Examination 

Q. What condition would you say this equip- 
ment was in? 

A. I would say it was in usable condition, all 
used equipment, though. 

Q. Would you say it was in good condition? 

A. Usable. 

Q. I am asking you if you think it was in good 
condition. 

A. I think it was good enough to use, yes. 

Q. You would say it was in good condition and 
ready for use? 

A. It can be used. It is not new property. 

Q. I would like to have you answer me spe- 
cifically on that question. I am asking you if ? in 
your opinion, it was in good condition and ready 
for use? 

A. I would say the property was all in shape so 
it [207] could be used. 



Hagenbeck-Wallace Shows Co. 159 

(Testimony of Kalph J. Clawson.) 

Q. Will you answer that yes or no, please f 

The Court: Just answer the question that he is 
asking. 

Q. By Mr. Schaefer: Did you consider the equip- 
ment in good condition and ready for use? 

A. I do, yes. It could be used. That is as far as I 
can tell. It could be used. As far as good condition, I 
don't know just how you mean that. 

Q. You are familiar with circus equipment, 
aren't you? A. I am, yes. 

Q. And you knew the purpose for which the de- 
fendant was going to use the equipment, didn't you? 

A. That is right. 

Q. And in your opinion it was in good condition 
for that purpose ? 

A. It could be used for circus purposes. 

Q. It was in good condition for that purpose? 

A. It was in usable condition for that purpose. 

[208] 

Q. Now, when did you begin working on that 
equipment? A. We started 

Q. The day of the week. 

A. I think it would be about a Thursday. 

Q. Thursday of the week preceding; is that 
right? A. That is right. 

Q. What else did you do from Thursday until 
the time that equipment moved into Inglewood? 

A. We painted the wagons and fixed up corner 
chains and ropes, and whatever we could do on it. 

Q. Tell me what else you did, if anything. 



160 Fanchon & Marco, Inc., vs. 

(Testimony of Balph J. Clawson.) 

A. We got — we brought up a cook house wagon, 
equipped with boilers and general stuff, painted the 
equipment, painted the poles. 

Q. Anything else you did besides the cook house 
and the painting of the equipment ? 

A. Yes. We had the wardrobe cleaned, sent it to 
the cleaners out at El Monte, I think. We fixed up 
electrical equipment, and had our men out there 
working night and day. 

Q. What electrical equipment? 

A. Cables and lines, etc. 

Q. The defendant didn't take the electrical 
equipment provided for in the contract ? 

A. No, they didn't take that. [210] 

Q. What electrical equipment was there that 
they took, that you did work on ? 

A. The cables and falls and stuff like that. 

Q. Any other work that you did? 

A. Yes. We painted the wagons. I have stated 
that before. We fixed all the wagons underneath, the 
gears; we straightened the gears up on the wagons 
and tightened all the connecting rods which was 
necessary. 

Q. How many men were employed for that pur- 
pose or working on it? 

A. We had, I would say, out there, roughly, 
probably a hundred. 

Q. Working on the equipment? 

A. Yes, working on the equipment. 

Q. Getting it in shape? A. Yes, sir. 



Hagenbeck-Wallace Shows Co. 161 

(Testimony of Kalph J. Clawson.) 

Q. Was there any work done on the runs ? 

A. Yes, the runs, the boards on the sides, was 
tightened up to pull them together. The runs was in 
good condition before. 

Q. What about the cars? A. Which cars? 

Q. Flat cars. What was the condition of the 
decks f 

A. The decking wasn't in bad shape. There was 
probably one or two places that was weak, but as a 
whole it was in good condition. [211] 

Q. They were completely re-decked, weren't 
they, some of them, at San Diego? 

A. No, they was not. 

Q. How many cars? 

A. I couldn't tell you what they did on that. 

Q. You say the sleeping cars were not equipped 
with blankets or sheets or pillow cases ? 

A. Not complete. We had some. 

Q. You say the custom in that regard is to fur- 
nish them with mattresses only? 

A. Yes, and built-in berths. 

Q. But you do furnish them with mattresses? 

A. Yes. 

Q. Did you not have a conversation with Mr. 
Daillard and Mr. Eagles, at which time they asked 
you about the berth equipment ? 

A. At winter quarters I told them — Mr. Daillard 
said we was supposed to equip the cars complete, and 
so I told him I didn't think so, because we didn't 
have the equipment. I gave them a list of what 



162 Fanchon & Marco, Inc., vs. 

(Testimony of Ralph J. Clawson.) 
equipment we had, so he said, "We ought to go get 
hold of some stuff anyway, and w T e will straighten 
this out later." So I didn't get any. 

Q. Didn't you tell him you would try to get 
some? A. No, sir. 

Q. Didn't you attempt to do so? [212] 

A. Mr. Eagles called up the United Tent & Awn- 
ing Company, and they said, "Who do you want 
this charged to?" 

Q. Isn't it a fact that you called the United 
Tent & Awning Company first and attempted to ob- 
tain some blankets ? A. No, sir, I did not. 

Q. On no occasion? A. No, sir. 

Q. Did you tell Mr. Daillard to procure the 
equipment f A. I did not, no, sir. 

Q. Did you have elephant how T dahs out there? 

A. They had five at M. G. M., four or five, and 
we had eight in the winter quarters left. 

Q. Were those usable? 

A. Every one of them, yes. [213] 



Hageribeck-Wallace Shows Co. 163 

MARCO WOLFF, 

called as a witness in behalf of defendant, being 
first duly sworn, testified as follows: 

Direct Examination [219] 

DEFENDANT'S EXHIBIT No. 15 

Western Union 

TWS MW PD1— Mr. John Ringling North 
Ritz-Carlton Hotel 
New York, N. Y. 

Strongly recommend rental to Fanchon & Marco. 
They are playing under some well known charity 
auspices out here. I have tried to liquidate our prop- 
erty out here and so far have not been successful. 
This rental will show us a good revenue as you 
know we are at a tremendous expense now. We will 
also have elephants, wagons, and cars for other ren- 
tals on the Coast. I worked out the price of sixteen 
hundred a week with Mr. Nelson, Fanchon and 
Marco's representative. Their admission prices are 
small, twenty-five and fifty a day, and they are 
really not in a position to pay any more. Was in- 
formed late this afternoon that they can get equip- 
ment from Rochester, Indiana to play the dates. 
Kindly advise me your opinion at once as I do not 
think we should lose this business. Regards. 
RALPH CLAWSON. 

[Endorsed] : For identification Deft. Exhibit No. 
15. Marked Nov. 27, 1940. 



164 Fanchon do Marco, Inc., vs. 

(Testimony of Marco Wolff.) 

A. Daillard told me that the calliope didn't 
work, and he said the rigging was in bad shape, the 
seats were in bad shape, the wagons needed a lot of 
work done to them, the cars on the trains needed a 
lot of work done. And he took me around and 
showed me — Daillard took me and showed me a lot 
of the bleacher seats without any backs on the back 
of them, and there was one entire section without 
any cross pieces at all. Later my insurance agent 
saw these seats and the equipment, and told me that 
I couldn't possibly get insurance for it. 

The Court: Whatever the insurance agent told 
him a few days later on wouldn't be material. You 
can't do that. [231] 

The Witness: This was at the time I was out 
there. 

The Court: No. Just this conversation between 
you and Daillard and Clawson. Clawson was present 
when this conversation was had between you and 
Daillard? 

A. Yes. Clawson told me that he would get the 
calliope fixed right away, and that the additional 
cross pieces for the seats would come out, and the 
elephant howdahs were not there, and he said he 
would get us the elephant howdahs right away. He 
said he didn't have any money and he couldn't fix 
up the railroad cars, that his credit wasn't good for 
that, and he asked us to advance the money for that. 

The Court : Asked you ? 

A. Yes. And he suggested that we could deduct 



Hagenbeck-Wallace Shows Co. 165 

(Testimony of Marco Wolff.) 

from our first payment any advances that we might 
have to make. There were quite a few purchases that 
had to be made for rigging and hardware and rope, 
and he said he would be ready with the show. But 
our rehearsal, which was for 9:00 o'clock originally, 
and then 10:00 o'clock, and then 11:00 o'clock, and 
2:00 o'clock, and 5:00 o'clock, and 8:00 o'clock at 
night, we still had no rehearsal. The equipment 
wasn't ready the entire first day. The tent was up, 
and so I told the performers the following da t y to 
have rehearsal in the morning, so that we would 
have a rehearsal before the matinee went on, but 
again they were busy trying to make repairs on 
rigging. I know one of the performers, Tiny Kline, 
refused to go up in the rigging with her ring [232] 
act, because she said she would break her neck. And 
there were continual postponements, which I re- 
ported continuously to Clawson, and finally, about 
30 minutes before w T e had to open the tent for the 
customers, we were able to just run through the 
opening part, and just walk through. We couldn't 
actually go through the rehearsal properly. The 
calliope, which is a very important part of the musi- 
cal part of a circus, was never usable. And we had 
to let a number of people sit right off the main track 
without seats to sit on. I complained to Clawson 
about it, and he said he would get it in shape. And 
they had a 3-day stand in San Diego, with a day in 
between, and he thought he could get it in shape for 
San Diego. And I told him I wouldn't pay him until 
he would get it in shape. [233] 



166 Fanchon & Marco, Inc., vs. 

(Testimony of Marco Wolff.) 

A. I told Clawson that I was very dissatisfied 
with the equipment, that it had taken us a day and 
a half to get it up, that we had spent over a thou- 
sand dollars already in putting things in shape that 
he was supposed to spend in order to deliver it to us 
in good shape, that much of the equipment had not 
been used, that some of the performers had refused 
to go up on the rigging because it was unsafe, and 
they didn't wish to risk their necks. I told him that 
we were tremendously involved with sponsors. I 
even told him about our deal with the Chief of 
Police in San Francisco. And I told him if we 
couldn't do any better, if it took us a day and a half 
to get the show up, I didn't see how we could make 
our next move, although I had left a day open be- 
tween Inglewood and San Diego, but beyond San 
Diego I didn't see how we could possibly put our 
circus on safely and meet our performances, if Mr. 
Daillard or Eagles would come and ask for another 
purchase order or for some cash. And Roy Wolff — 
we had to send to our studio several times and get a 
large check cashed, and he would have to be spend- 
ing out tens and twenties and thirties and hundreds. 

[237] 
Cross Examination 

Q. Then you sent a telegram to your sponsors? 

A. Yes, sir. 

Q. And that telegram is contained in this Ex- 
hibit 14, reading as follows: " Kramer of American 
Federation of Actors has called out acts which are 



Hagenbeck-Wallace Shows Co. 167 

(Testimony of Marco Wolff.) 

members of his organization. This and other labor 
difficulties which have caused us to miss matinee 
performances in Santa Ana and Pasadena necessi- 
tates us advising you with regret we will be unable 
to fulfill contract for circus performance. One of 
our men will contact you later. Fanchon & Marco, 
Inc." 

You sent that to these named sponsors'? 

A. Yes, sir. [264] 



MRS. PATTY HACKETT, 

called as a witness on behalf of defendant, being 
first duly sworn, testified as follows : 

Direct Examination 

Q. By Mr. Schaefer: Mrs. Hackett, what is your 
business or occupation'? 

A. I have charge of the Fanchonettes and am 
one of them. 

Q. Mrs. Hackett, do you recall the Great Ameri- 
can Circus in May of 1939 ? A. I do. 

Q. Were you in that show ? A. Yes, I was. 

Q. Did you take part in the Fanchonette show of 
that circus? A. Yes. 

Q. Did you travel with the circus .? A. I did. 

Q. In the sleeping cars? A. I did. 

Q. Did you have occasion to go into the sleeping 
cars of the circus? A. Yes. 

Q. When did you first go in, at what time or 
place? A. In Inglewood, where we opened. 



168 Fcmchon & Marco, Inc., vs. 

(Testimony of Mrs. Patty Hackett.) 

Q. Will you tell us the condition of the sleeping 
car [275] you occupied? 

A. Yes. The berths that we slept in had no cur- 
tains, and there were no springs on the berths. 
There were just wooden boards, with straw mat- 
tresses on them, and they had evidently been in stor- 
age for quite some time, because there were lumps 
in them. 

Mr. Combs : The statement that they had evidently 
been in storage for some time was a conclusion of 
the witness. 

The Court : Well, she says there were lumps. 

The Witness : I came to that conclusion because of 
the 

The Court : Answer the question. 

Q. By Mr. Schaefer: Just state what you saw. 
What was the condition of the mattresses? 1 

A. They were in very poor condition. 

The Court: That isn't it. 

Q. By Mr. Schaefer: Tell us whether they were 
smooth or lumpy? 

A. They were lumpy, and they were all downs 
and ups, and you couldn't sleep on them. It was 
practically impossible to. 

Q. Were there any toilet facilities. 

A. Yes, and they were in very bad condition. 

Mr. Schaefer: I will stipulate that that may go 
out. When you say "in very bad condition" you are 
testifyhig to your conclusion. And the court doesn't 
know what a bad condition may mean. [276] 



Hagmbeck-Wallace Shows Co. 169 

(Testimony of Mrs. Patty Hackett.) 

Q. By Mr. Schaefer: Will you tell us what the 
condition was ? Was there running water or not, and 
were they clean? 

A. There wasn't running water, and the lava- 
tory, the toilet in there could not be flushed, because 
of that reason, and it had been used, and we could 
not use it afterwards, because the refuse was still in 
there. 

Q. Did you sleep in the car? A. I tried to. 

'Q. Is there anything else you can tell with re- 
spect to the equipment? A. Yes. 

The Court : That is too general. 

Q. By Mr. Schaefer: First, tell me what equip- 
ment you are speaking about — in the sleeping car? 

A. In the sleeping car. 

Q. Proceed. 

A. Yes. The windows wouldn't stay open. We 
had to prop them open to get air, prop them open 
with a Coca Cola bottle. 

Q. Anything further with respect to the nature 
of the equipment ? A. I believe not. 

Q. The sleeping car or otherwise? How many 
girls were in the car with you ? 

A. There were 20. [277] 

Q. Did you examine all the berths, or those occu- 
pied by the Fanchonettes ? 

A. I was in several of them, yes. 

Q. Were they all in the same general condition? 

The Court : What was the condition of the balance 
of them? 



170 Fanchon & Marco, Inc., vs. 

(Testimony of Mrs. Patty Hackett.) 

A. They were all practically the same. I didn't 
examine them minutely, but they seemed to be all 
the same. 

Mr. Schaefer: Any cross examination? 

Cross Examination 

Q. By Mr. Combs: When did you arrive at 
Inglewoodf 

A. I don't remember the exact date. 

Q. Was it the day of the first performance? 

A. Yes, I believe so, or the date previous to the 
opening day. 

Q. The cars, however, were in Inglewood when 
you arrived? A. I don't know. 

Q. They were in Inglewood when you first saw 
them, were they not? A. Yes. 

Mr. Combs: That is all. 

The Court : Call your next witness. 

Mr. Schaefer: I have, your Honor, six additional 
witnesses who were in the Fanchonettes, whose evi- 
dence will [278] be cumulative, and I take it your 
Honor does not care to have that produced? 

The Court: Do you concede that these witnesses 
would testify the same way? 

Mr. Combs : Substantially as this young lady did. 

Mr. Schaefer : I have here Miss Lorraine Roberts, 
Miss Virginia Perkins, Miss Mary Carr, Miss Ruth 
Barr, Mrs. D. G. Douglass and Mrs. Ann Weber, 
who will testify in the same manner. 

Mr. Combs : If called, they would testify substan- 
tially as this witness did. 

The Court : Yes. Call the next witness. [279] 



Hagenbeck-Wallace Shotvs Co. 171 

TINY KLINE, 

called as a witness in behalf of defendant, being 
first duly sworn, testified as follows : [280] 

Direct Examination 

A. The mattress was lumpy and very thin. And 
the runners in the aisle at this particular place in 
front of my berth had a big hole about maybe two 
feet broken out, and you could stumble in it easy, 
and it was unsanitary. 

'Mr. Combs: That is a conclusion of the witness. 

The Court: Proceed. 

A. And one toilet assigned to the ladies was just 
a toilet, with no running water, and the wash basin 
in it was so close that it would only hold one per- 
son. While one girl would be washing in there, no 
one could utilize the toilet, and that, of course, was 
an inconvenience to everybody. 

Q. By Mr. Schaefer: Was there running water? 

A. In the wash basin, yes. 

The Court: Was there water to flush the toilet? 

A. No. And the wash basin, which was really 
supposed to be for the girls to make their toilet, 
was utilized by the porters to shine the shoes, and 
therefore we had only [285] one toilet and wash 
room, and it was very bad. [286] 



172 Femchon <k Marco, Inc., vs. 

WAYNE DAILLAED, 

called as a witness on behalf of defendant, being 
first duly sworn, testified as follows : [288] 

Direct Examination 

Q. By Mr. Schaefer: What did you see? 

A. I saw splintered decking, splintered timber. 

The Court: Tell us what you saw. 

A. I saw the decks splintered, with holes in 
them, places that were worn. 

Q. By Mr. Schaefer: Were they repaired at 
San Diego ? A. Yes. 

Q. Did you discuss this with Mr. Clawson? 

A. Yes. I got the report on that from Mr. Bee- 
son, I believe his name was, and also from Mr. 
Eagles, and I went down and looked at them, and I 
called it to Mr. Clawson 's attention. At that point 
Mr. Clawson had refused to do any more at San 
Diego, as he said he had no authority to spend 
any money until the situation had been worked out. 
I said, "Well, I am going to have the train decks 
repaired of necessity, and I am going to hold Ha- 
genback- Wallace for it." 

Q. You said that to Mr. Clawson? 

A. Mr. Clawson. 

Q. At San Diego? A. At San Diego. [298] 

Q. Did you see any of the wagons empty out 
from the train? A. Yes. 

Q. To the lot? A. Yes. 

Q. Did you observe any of them in difficulties? 

A. Yes. 



Hagenbeck-Wallace Shows Co. 173 

(Testimony of Wayne Daillard.) 

Q. Will you state what you saw in that con- 
nection ? 

A. Yes. I was going from the lot downtown to 
lunch with Mr. Priest. 

The Court : Just what you saw. 

A. I saw a wagon boxing on fire. 

Q. By Mr. Schaefer: How fast was the wagon 
moving 1 ? 

A. We followed the wagon for about a mile, Mr. 
Priest and myself, and I would say four, or maybe 
five miles an hour. 

Q. Did you see that wagon again? 

A. Yes. 

Q. When did you see it again'? 

A. An hour later, when we returned from lunch. 

Q. Where did you see it the second time? 

A. It had proceeded about a mile and a half, 
possibly. 

Q. Was the matinee given in Santa Ana? 

A. It was not. [299] 

Q. Did you give the afternoon performance in 
Pasadena ? A. No. 

Q. Do you recall any lines breaking in Pasa- 
dena, or falling of the tents? 

A. Yes. I observed some lines break in Pasa- 
dena. 

Q. Do you recall how many times that hap- 
pened? Were you there? 

A. The report was — — 

The Court : Not the report. What did you see ? 

A. I saw the tent, that is, the canvas, drop on 



174 Fanchon dt Marco, Inc., vs. 

(Testimony of Wayne Daillard.) 

three different occasions that I observed it. I 

couldn't, however, observe the cause of that. 

Q. By Mr. Schaefer: You saw the tent fall, did 
you? A. Yes. 

Q. Did you have any conversation with Mr. 
Clawson with respect to that ? 

A. I don't recall any. 

Q. Did you have any conversation with him with 
respect to the ropes ? 

A. Yes. In substance, that conversation was 

[300] 

Q. That was in Pasadena? 

A. In Pasadena. 

Q. Was anyone else present besides you and Mr. 
Clawson? 

A. I believe Mr. Eagles was present at that. As 

A. I saw the tent, that is, the canvas, drop on 
a matter of fact, I think Mr. Eagles brought about 
the conversation. 

Q. What was said by the parties? 

A, In substance it was that I wanted, I asked, 
or maybe demanded — I don't know — that those 
ropes be renewed. We had very concrete evidence 
that there was something wrong with them, and Mr. 
Clawson again advised that he wasn't able to do 
anything in the way of purchasing ropes. 

Q. Did he state why? 

A. No, I believe not, [301] 

Q. What was the condition of the wardrobe? 

A. Very bad. 

The Court: What do you mean by that? 



Hagenbeck-Wallace Shows Co. 175 

(Testimony of Wayne Daillard.) 

A. I mean the wardrobe was faded and worn, 
and I have seen a lot of wardrobe. 

The Court: Well, just what you saw as to the 
condition it was in. 

A. And incomplete. 

The Court: In what respect? 

A. There would be trousers missing to uniforms, 
or caps missing to uniforms, and turbans missing. 

The Court: We could save considerable time 
if you would [302] just point out how many tur- 
bans were missing. 

A. I can't do that accurately. 

Q. By Mr. Schaefer: Can you tell us about what 
portion of the wardrobe was usable I We can arrive 
at it that way. 

A. You asked me what condition the wardrobe 
was in, and I have handled wardrobes for years — 

The Court: Don't argue. Just answer the ques- 
tions. 

A. I recall that we replaced, or bought, that 
were missing, duck trousers for the band; caps for 
the band; turbans for some of the entry acts. 

The Court: The missing parts were supplied by 
you? 

A. Yes, we purchased them. 

Q. By Mr. Schaefer: Can you state now what 
percentage or proportion of the wardrobe that was 
furnished was usable, and what was not usable ? An- 
swer that yes or no. A. Yes. 



1 76 Fanchon & Marco, Inc., vs. 

(Testimony of Wayne Daillard.) 

Q. I will ask you what percentage of the ward- 
robe that was furnished was usable and what per- 
centage was not usable*? 

Mr. Combs: That is objected to as calling for a 
conclusion of the witness. 

The Court : I think from his answers to the ques- 
tions awhile ago he is not qualified to answer. 

Mr. Schaefer: I am directing it to the entire 
wardrobe. 

Q. By Mr. Schaefer: Do you know the amount 
of wardrobe that was obtained from the Hagen- 
back- Wallace Shows? Did [303] you see the ward- 
robe ? A. Yes. 

Q. Do you know what proportion of that was 
used? 

A. There was about 75 per cent of what we took 
that we actually used. 

Q. About 75 per cent? A. Yes. 

Q. Were there any elephant howdahs supplied 
by Hagenback- Wallace ? A. No. 

Q. Was the calliope in operation? 

A. No. [304] 



"GLENN HALL, 

called as a witness in behalf of defendant, being 
first duly sworn, testified as follows : [314] 

Direct Examination 
A. The chairs were all right. The plank they 
sit on, there was a number of them that were splin- 



Hagmbeck-Wallace Shows Co. 177 

(Testimony of Glenn Hall.) 

tered; the edges that were on the front of them or 
the backs, to hold the chairs, there were a number 
of them off, and it caused the chairs 

Mr. Combs: Just a minute. That is a conclusion. 

Q. By Mr. Schaefer: What did you observe 
after the seats were erected with respect to the 
chairs? Did they set normally? 

A. Yes. There was a few of the planks that had 
boards nailed over them so that they would set 
normally. 

Q. Did you examine the bolts or nuts, or see 
them when you were erecting them ? 

A. There were a few of them that were replaced 
on the jacks, yes. 

Q. Did you sleep on the train? 

A. I did one night, yes. 

Q. What was the condition of the car? 

Mr. Combs: That is objected to as calling for a 
conclusion of this witness. 

Q. By Mr. Schaefer: State what you saw or 
observed. 

A. On the train, on the sleeping car, there were 
bunks that had small, thin mats, instead of mat- 
tresses on them, and they were hard and lumpy, 
and the windows on the car, you couldn't hardly 
open them. The one I was in I couldn't get the 
window open, so I rode on the flat car. [317] 

Mr. Schaefer: Cross examine. 



178 Fanchon dc Marco, Inc., vs. 

(Testimony of Glenn Hall.) 

Cross Examination 

Q. By Mr. Combs: You wouldn't state that all 
the windows in the cars couldn't be opened, would 
you? 

A. Well, in about four or five different bunks 
that I tried, I couldn't. [318] 



DEPENDANT'S EXHIBIT No. 16 

Great American Circus 

INCOME AND EXPENSE STATEMENT 

'icket Sales Including Tax Inglewood 5/24/39 $1,607.69 

" San Diego 5/26/39 578.71 

"San Diego 5/27/39 1,984.06 

"San Diego 5/28/39 1,747.20 

" Santa Ana 5/29/39 1,587.70 

11 " " Pasadena 5/30/39 864.47 

" " " " Pomona 5/31/39 804.80 



Total Ticket Income $9,174.63 

lisc. Income: 

Banner Account $145.00 

Milk Fund 11.59 

Pie Car 16.99 



Total Misc. Income 173.58 



Total Income $9,348.21 

Ixpense : 

General Misc. Operating Expenses per statement $29,252.15 

Cost of Equipment Repairs per statement 1,672.40 

Settlement with Sponsors per statement 1,747.59 



Total Expense $32,672,14 



Net Loss $23,323.93 



Hagenbeck-Wallace Shows Co. 



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190 Fanchon & Marco, Inc., vs. 

R. V. KETTRING, 

called as a witness in behalf of defendant, being 
first duly sworn, testified as follows: 

Direct Examination 

Q. What is your position with the Santa Fe 
Railroad? A. General car foreman. 

Q. Did yon have occasion to inspect and ex- 
amine some circus cars of the Great American Cir- 
cus in May of 1939? A. I did. 

Q. Did you make any repairs to those cars? 

A. Yes, sir. 

Q. Do you have any data there indicating the 
nature of the repairs and the number of the cars? 

A. Yes. We have a complete 

Q. Where did you pick up those cars? 

Mr. Combs : Excuse my interrupting you. We will 
stipulate that the Santa Fe made repairs of three 
hundred and some odd dollars. [336] 

The Court: How much is that? 

Mr. Combs: Three hundred and thirty-two and 
some cents. 

Mr. Schaefer: Of course, it isn't, your Honor, 
the purpose to prove the amount with this witness. 
The purpose is to prove the nature and extent of 
the repairs, as one of the elements of the failure 
of the equipment. I have called this witness to 
show T the condition of the cars. That is my point. 

The Court: Oh, I don't care anything about that. 

Mr. Schaefer: Well, I think it goes to the de- 
fendant's case very largely, your Honor, to show 



Hagenbeck-Wallace Shows Co. 191 

(Testimony of R. V. Kettring.) 
how extensive the repairs were. We have the testi- 
mony of Mr. Clawson that there were minor re- 
pairs made, to begin with, and I have a witness here 
to show what the nature of the repairs was, the 
man who did it. 

The Court: The nature does not make any dif- 
ference. 

Mr. Schaefer: It shows the extent of the repairs 
necessary to the equipment, and their condition 
when they came from Baldwin Park, your Honor. 
It goes to that part of our case. 

The Court : When was this inspection made % 

A. Well, the final inspection on the cars was 
made on May 23rd, at our Santa Fe yards. The 
original inspection was made prior to that time. 
I do not recall the date. It was made at Baldwin 
Park. The inspection at Baldwin Park, you might 
say, was the preliminary inspection. [337] 

Q. By Mr. Schaefer: What condition did you 
find the cars in? 

A. We found the cars at Baldwin Park in what 
we would term, in a railroad term, as in fair con- 
dition, needing repairs to the safety appliances, 
air brakes, and the running gear of the cars, to 
make them safe to move. 

Q. Will you state what repairs were made and 
give the car numbers, if you can, and state why 
they were made? 

The Court: We don't need that. What other 
defects, if any, did you find in the cars % 



192 Fanchon dc Marco, Inc., vs. 

(Testimony of R. V. Kettring.) 

A. Well, I found several little defects that was 
in violation of the Interstate Commerce rules, if 
we would operate the cars over our lines, such as 
old air lines, wheels with worn flanges. And we had 
one coach that was — on request of the parties op- 
erating the show, they asked us to make repairs — 
it had a defect in violation of the Interstate Com- 
merce rules, and these repairs were all made to the 
cars on our repair tracks, prior to their departure 
for San Diego. The cars were brought back from 
Inglewood to our repair tracks, and repairs were 
made. 

Q. By Mr. Schaefer: Mr. Kettring, will you 
look through these bills as quickly as you can and 
tell me if they are the original bills that came from 
the Santa Fe to Fanchon & Marco? 

A. Yes, sir, they are. They are the original 
bills. 

Q. Do they show the nature of the repairs'? 

[338] 

A. They show the nature of the repairs and why 
the repairs were made. 

Q. And the cars on which they were made? 

A. And the individual cars upon which they 
were made. 

Q. That first yellow bill has the name "Ket- 
ring" on it. Is that your signature? 

A. That is the signature of my clerk. 

Q. Put there at your direction? 

A. At my direction. 



Hagenbeck-Wallace Shows Co. 193 

(Testimony of R. V. Kettring.) 

Mr. Schaefer: We offer these bills in evidence 
for the purpose of showing 

The Court: Any objection? 

Mr. Combs: I don't believe so. Is that the three 
hundred and thirty odd dollars? 

Mr. Schaefer: $332.22. 

The Court: The same amount as in your bill? 

Mr. Schaefer: That is right. 

The Court: Let it be filed. 

The Clerk: Defendant's Exhibit No. 17. 



DEFENDANT'S EXHIBIT No. 17 

Santa Fe 

MEMORANDUM BILL 

Los Angeles, Calif. Station, May 24, 1939 

The Greal American Circus. 
For repairs to cars 65, 85, 87, 80, 64, 83, 89, 88, 84, 82, 81, 52, 50, 45, and 46, Los Angeles, repair track 
May 23rd, 1939. 

Items of Repair* Amount Items of Repairs Amount 

As per A. A. R. billing attached. 

Miscel. charges (Labor & mtl $260.09 

Labor 26.4 hours (a $1.25... 33.00 

La bor 17.8 hours @ 1.40 24.92 

Labor 6. hours @ .42 V 2 2.55 

Wrot iron 168 lbs. @ 5%^ 9-24 

Lumber 6 BM ft. @ 05^ 30 

Spring steel 24 lbs. @ 5i/ 2 tf 1.32 

Mailable iron 10 lbs. @ 08^ 80 

$332.22 
(Bill to be collected by Agent, Los Angeles,) 
(Bill made on AAR basis ) 

Mr. Mendelsohn-cc-CRM, RT. 
CREDIT 

LABOR MATERIAL 

Account Amount Account Amount 

314 129.45 314 99.38 

317 70.18 317 30.66 

402 P 2.55 

Note : To be forwarded to the Audit office. 

R. V. KETRING £ 

4— 

General Car Foreman. 
AJP/RJ 

M. M. 



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218 Fanchon & Marco, Inc., vs. 

(Testimony of E. V. Kettring.) 

Mr. Schaefer: May it be stipulated that we paid 
$55 for one round trip from Inglewood to Los An- 
geles, in transporting the cars? 

Mr. Combs: So stipulated. 

Mr. Schaefer: Cross examine. 

The Court: Any cross? 

Mr. Combs: Yes. [339] 

Cross Examination 

Q. By Mr. Combs: The cars were moved from 
Baldwin Park to Inglewood in the condition in 
which they were at Baldwin Park, were they not? 

A. Yes, sir. After several minor repairs were 
made to the cars, and on agreement with the par- 
ties in charge of the circus at that point that they 
would see that the air brakes were operative, we 
agreed to move them to Inglewood, so they could 
unload them, and move them from Inglewood back 
to our repair tracks for repairs. 

Q. And that was done? 

A. That was done. I was the one that agreed 
to that. [340] 



Hagenoeck-Wallace Shows Co. 219 

TED DUCEY, 

called as a witness in behalf of defendant, being 
first duly sworn, testified as follows: 

Direct Examination 

Q. Did you*do any work for the Great American 
Circus in May of 1939? A. I did. 

Q. What work did you do? 

A. I furnished trucks to move their wagons to 
the Rose Bowl. 

Q. And where, with relation to your business, 
was the [341] railroad siding upon which the cir- 
cus unloaded? 

A. Right in front of my yard. 

Q. Tell us about the hauling of the trucks, how 
you hauled them. 

A. We hauled the wagons behind the trucks, 
tied them on and hauled them down to the Rose 
Bowl. Going out Lincoln Avenue, there is quite a 
hill going down into the Rose Bowl, and the main 
reason for the trucks, there was no brakes on the 
wagons or anything, and we had to tie the wagons, 
one in back of one truck, to start it, and one truck 
behind there, to hold it back, so they wouldn't run 
away. We lost two or three of them, as it was. 

Q. Did you examine the circus wagons? 

A. I saw them, yes. 

Q. What did you find with respect to the 
brakes ? 

A. There wasn't any of them that were any good 
at all. There wasn't one wagon that had one that 
was worth even trying to use. 



220 Fanchon & Marco, Inc., vs. 

(Testimony of Ted Ducey.) 

Q. And you put one truck on in front and one 
on behind? 

A. Yes. We would take two wagons and tie it 
behind one truck, and then tie an extra truck on 
behind, to hold them back. 

Q. Are you familiar with 'circus equipment'? 

A. Well, I have watched 

The Court: Answer yes or no. 

A. Yes. [342] 

Q. By Mr. Schaef er : Over what period of time 1 

A. 20 years or more. 

Q. Have you seen circuses come there during 
that time? A. Yes. 

Q. Have you seen the equipment? 

A. Yes, sir. 

Q. Did you see the runs that were used in the 
Great American Circus? A. Yes. 

Q. Did you see the condition they were in? 

A. I did. 

Q. What condition were they in? 

Mr. Combs: That is objected to on the ground 
that no foundation has been laid for his expert 
testimony. 

Mr. Schaef er: I will go further, your Honor. I 
am just trying to conserve time. 

Q. By Mr. Schaef er : Have you examined circus 
equipment? A. I have. 

Q. Have you had occasion to work for circuses? 

A. I have. 

Q. On numerous occasions? A. I have. 



Hageribeck-Wallace Shows Co. 221 

(Testimony of Ted Ducey.) 

Q. Over how many years? 

A. Oh, 20 years. 

Q. You have seen how many circuses unload 
there? [343] 

A. One a year, I guess, I would say. 

Q. Can you tell us what you observed as to the 
appearance of these runs? 

Mr. Combs: That is objected to as incompetent, 
irrelevant and immaterial and still no qualification 
as an expert. 

Mr. Schaefer: Your Honor, he can tell what he 
saw, of his own knowledge. He doesn't have to be 
an expert to testify to what it looks like or what it 
appears to be. Anyone can testify to that. 

Q. By Mr. Schaefer: Are you familiar with runs 
used in unloading flat cars? A. I am. 

Q. Have you observed runs used on circus flat 
cars over a period of years? A. I have. 

Q. How many have you examined? 

A. I have seen every one that unloaded for 20 
years, one each year at least. 

Q. Have you seen the wagons go up and down 
the runs? A. I have. 

Q. The operation of the runs? A. Yes. 

Q. Did you observe these runs? A. Yes. 

Q. What condition did they appear to be in? 

A. They were wood. They were not steel, like 
they [344] generally use on all the other circuses, 
and they had a crib up under them to brace the 
wood, and had quite a little trouble unloading. 



222 Fanchon dc Marco, Inc., vs. 

(Testimony of Ted Ducey.) 

Mr. Combs: May we have that last stricken out, 
"quite a little truoble unloading"? 

The Court: That is a conclusion of the witness. 
Proceed. 

Q. By Mr. Schaefer: What condition did the 
runs appear to be in ? 

The Court: What condition were they in? 

A. They were not in very good condition. 

The Court: Tell us about it, 

A. They were made out of wood, and they had 
wooden cribbing underneath them, to let the cars 
off, and as they would let these wagons down over 
the wood runway, the vibration would drop the 
cribbing out from under it, and then they would 
have to stop and crib it all up again. [345] 

Q. Did you examine the bolster block that broke ? 

A. Yes. 

Q. Will you describe what a bolster block is? 

A. A bolster block is on a w r agon that is com- 
monly [346] called, sometimes a fifth wheel, where 
the kingpin goes in. When they get worn they get 
a sharp edge, and if they get caught in a railroad 
track or twist or turn, you can't hardly get them 
back in line again. 

Q. Did you examine these? 

A. We had occasion to examine all of them, be- 
cause we had trouble with them. 

Q. Have you examined bolster blocks and wa- 
gons for a long time? 



Hagenbeck-Wallace Shows Co. 223 

(Testimony of Ted Ducey.) 

A. Ever since I was a kid. 

Q. On how many wagons 1 

A. My father had at least 50 wagons, in the 
same business all his life. 

Q. And you worked for him ? A. Yes. 

Q. What condition were these bolster blocks 
in? A. They were practically worn out. 

Mr. Combs: That is a conclusion. 

The Court: Yes. It will be stricken. 

Q. By Mr. Schaefer: Were they worn or not 
worn? A. They were worn. 

Q. Did you notice anything else about them that 
you now recall? A. About what? 

Q. The bolster blocks, any other condition ? 

A. That was all it could be, was worn. [347] 



J. V. AUSTIN, 

called as a witness in behalf of plaintiff, being 
first duly sworn, testified as follows: 

The Clerk: State your name, please. 

A. J. V. Austin. 

Direct Examination 

Q. By Mr. Combs: What is your occupation, 
Mr. Austin? A. Showman. 

Q. How long have you been engaged in that 
business? A. About 40 years. 

Q. And in that connection what shows have you 
been involved with, as such showman? 



224 Fanchon & Marco, Inc., vs. 

(Testimony of J. V. Austin.) 

A. John Robinson's; H agenback- Wallace ; Al 
Gr. Barnes; Sells-Floto; Ringling Brothers; Bar- 
num & Bailey; and the Great American Circus. 

Q. What capacities did you work for those or- 
ganizations in? 

A. From advertising agent to manager. 

Q. Practically every capacity of an executive 
nature? A. Most every one. 

Q. And in that connection did you become very 
familiar with the operation and complete activities 
and functions of circuses? A. Necessarily. 

Q. And your present residence is at San An- 
tonio, Texas? [351] A. Yes, sir. 

Q. Mr. Austin, did you have occasion to meet 
Marco Wolff, of Fanchon & Marco, involved in this 
law suit, at some time during 1939 ? A. I did. 

Q. What was the nature and what were the cir- 
cumstances of that meeting? 

A. I was employed by them as traffic manager 
and advertising agent of the Great American Circus. 

Q. When was that employment undertaken? 

A. About the 8th or 9th of May. 

Q. 1939? A. 1939. 

Q. Who employed you? 

A. Mr. Nelson sent me the wire that gave me 
the employment. 

Q. What did you do then? 

A. I came from San Antonio here. 

Q. When did you arrive here? 

A. I think it was about the 7th or 8th. 



Hagmbeck-Wallace Shows Co. 225 

(Testimony of J. V. Austin.) 

Q. What did you do upon your arrival? 

A. I conferred with Mr. Nelson regarding the 
advertising matter that had been gotten up, and 
made some suggestions regarding additional adver- 
tising matter, and assisted in making the route in 
such a way that the moves could be made by train. 

[352] 

Q. How long did that activity engage your at- 
tention? A. I would say about a week. 

Q. Then about the 17th of May, or the 15th 
of May, did you continue your work for the Great 
American Circus 1 ? A. I did. 

Q. In what capacity? 

A. As traffic manager and advertising agent. 

Q. What did you do in that connection from 
then to the 23rd of May? 

A. I consummated the railroad contract for the 
movement of the special train and directed the ac- 
tivities of the advertising agent, and divers and 
sundry other things connected with the advertising. 

Q. You are familiar with the custom of renting 
railroad coaches to circuses, or in circuses, are you 
not? A. Again, please. 

Q. You are familiar with the custom or the 
manner in which railroad coaches, Pullman coaches, 
or those coaches in which the performers sleep, are 
rented to circus companies, are you? 

A. You mean rented by circus companies from 
other owners ? 

Q. Yes. A. Yes. 



226 Fanchon & Marco, Inc., vs. 

(Testimony of J. V. Austin.) 

Q. Are they rented with or without pillows, 
sheets and blankets? [353] 

A. When rented from the Pullman Company, 
which it sometimes becomes necessary to do, they 
naturally come equipped, with their man in charge, 
and, I would say, when being rented for other pur- 
poses, without. 

Q. That is to say, in all other cases, where such 
cars are rented, other than when they are rented 
from the Pullman Company, they come without that 
equipment? A. I would say so, yes. 

Q. Did you have occasion to examine the rail- 
road cars in this Great American Circus? 

A. I did not. 

Q. You did not? A. I did not. 

Q. Did you go out to Baldwin Park before the 
opening day of the circus? A, I did. 

Q. Did you examine zny of the equipment out 
there at that time? 

Mr. Schaefer: Just a minute. I object to that 
unless it is the equipment used by the Great Ameri- 
can Circus. 

The Court: It should be limited. 

Mr. Combs : It should be. I so qualify my ques- 
tion. 

A. Only to the extent that the various wagons 
that were to be used were identified by Mr. Clawsou 
as "this" and "that" and "this," and so forth. 

Q. By Mr. Combs : Can you state what your ob- 
servation [354] of their condition was at that time ? 



Hagenbeck-Wallace Shows Co. 227 

(Testimony of J. V. Austin.) 

A. My observations of their conditions were 
that they were usable. 

Q. Were they in good condition, suitable for use 
for the production of a circus? 

Mr. Shaefer: I object to that as calling for the 
conclusion of the witness, without proper founda- 
tion being laid. 

The Court : Let us find out what he knows about 
it. Do you know anything more about them? 

A. I can only say that they looked to me to be 
usable. 

Q. By Mr. Combs : You made only the one visit 
in Baldwin Park before the 23rd? A. Yes. 

Q. And on the 23rd what did you do in con- 
nection with the Great American Circus? 

A. I devoted most of my time to the advance 
activities, in getting the advertising out and di- 
recting the men in charge of it. 

Q. Were you present at Inglewood when the 
show was put on? 

A. I was there at the night performance. 

Q. Did that go off in order and in a normal 
manner % 

A. I thought for the initial day it went off 
unusually good. 

Q. Were you at San Diego when the show went 
off there? [355] A. I was not. 

Q. Were you at Santa Ana when it went off 
there ? A. I was not. 

Q. At Pomona? A. No, sir. 



228 Fanchon & Marco, Inc., vs. 

(Testimony of J. V. Austin.) 

Q. Were you at Pasadena? A. No, sir. 

Q. Then the only show or performance that you 
saw was that at Pnglewood? A. Yes, sir. 

Q. Did you have occasion at any time during 
the course of the operation of the Great American 
Circus to examine the equipment? 

A. I did not. 

Q. In connection with the production of cir- 
cuses, has it been your observation that circuses 
have one or more hot boxes in a run of even a week ? 

Mr. Schaefer: I object to that as leading and 
suggestive. 

The Court: It is leading. Sustained. 

Q. By Mr. Combs: Has it ever been your ex- 
perience to observe a hot box on one of the wagons 
in a circus? A. Yes. 

Q. Frequently or infrequently? 

A. Frequently, especially since they move them 
by automobile. [356] 

Q. In your experience w T ith circuses, how long 
does it ordinarily take to get smooth runing opera- 
tion after the circus has first started running? 

A. I would say about a week. 

Q. Was there any difference in the manner in 
which this Great American Circus, so far as you 
observed it, observed the task of getting under way 
as a smoothly operating circus, from any other 
circus % 

Mr. S'chaefer: I object on the ground that no 
foundation has been laid, and the witness was not 



Hagenbeck-Wallace Shows Co. 229 

(Testimony of J. V. Austin.) 

present, and didn't have the opportunity to see 

the functioning of this circus. 

The Court: He doesn't seem to have shown, at 
any rate, that he knows anything about it in these 
other places. 

Q. By Mr. Coombs : Respecting the billing of a 
circus, how long is it ordinarily the case that billing 
is done, how long in advance of the presence of the 
circus in a given town"? 

A. Usually two weeks. 

Q. Was that done in the case of the Great 
American Circus? A. It was not. 

Q. How long was the advance notice of billing 
in that circus? A. Seven days. 

Q. Was that an inadequate length of time for 
the best results in billing? [357] 

A. According to the regular way of doing it, 
yes. 

Q. During your experience in a circus have you 
ever seen train flat decks or runs repaired in the 
ordinary run of a circus? 

A. You refer to the decking on the flat cars? 

Q. Yes. A. It frequently wears out. 

Q. And has to be replaced? 

A. And has to be replaced from time to time — 
from the spikes in the chock. 

Q. Is such also the case with tent rigging, blocks, 
falls and chairs? A. Yes. 

Q. And also with wagons, in fact; isn't that 
correct ? 



230 Fanchon & Marco, Inc., vs. 

(Testimony of J. V. Austin.) 

A. They continually may get out of order. They 
have very strenuous work, riding on the flat cars 
at night and being hauled over all kinds of roads 
in the daytime. 

Q. Would you say, from your experience with 
a circus, that repairs becoming necessary to such 
equipment during the course of a circus are an 
ordinary or an extraordinary thing ? 

A. Any circus requires daily repairs. 

Q. A blacksmith goes right along with it? 

A. A corps of blacksmiths. 

Q. And is constantly in attendance, fixing up 
miscellaneous circus equipment ? [358] 

A. Yes. 

Q. Including blocks, falls, wagon runs and flat 
decks, and everything? A. Yes. 

Q. Is that right? A. Yes. 

Mr. Combs: That is all. 

The Court: Cross examine. 

Cross Examination 

Q. By Mr. Schaefer: Mr. Austin, you say re- 
pairs are frequently necessary? A. Daily. 

Q. Is that caused by the use of the equipment ? 

A. Yes, by the very strenuous treatment it re- 
ceives. 

Q. After equipment has been brought into win- 
ter quarters after a season, is it customary to make 
any repairs then? 

A. Not until before they start out in the spring. 

Q. About how long would it take to get their 
equipment in shape? 



Hagenbeck-Wallace Shows Co, 231 

(Testimony of J. V. Austin.) 

A. That would depend upon the force. 

Q. Tell me about the force. Give me the number. 
Give me some idea as to how long it would take. 

A. That would depend upon the nature and the 
amount of the repairs, and the kind and number of 
mechanics that [359] you have to make them with, 
and the materials, and the accessibility of the spe- 
cial material which is necesisary. 

Q. Suppose, Mr. Austin, that you have circus 
equipment out for a season — I suppose that would 
be from spring until about September? 

A. Until about November. 

Q. Suppose you had circus equipment out for a 
season, in ordinary use, such as it gets, and which 
you are familiar with, how long would you say 
it would take to put that equipment into repair be- 
fore it could go out the next season, and tell me 
upon what you base it, number of men, etc. 

A. I wouldn't hazard a guess imtil I had seen 
the equipment and know what repairs are necessary. 

Q. Will you tell me how long it would have 
taken to put the Hagenback- Wallace equipment that 
you saw out there into shape, supposing it to have 
come in in September, and to have had no work 
done to it? 

A. I wouldn't know what kind of shape it was 
brought in in. 

Q. In good condition, so that it would be thor- 
oughly repaired, and so that it would be usable 
and 

Mr. Combs: We object to that. It is a little bit 
involved there. 



232 Fanchon & Marco, Inc., vs. 

(Testimony of J. V. Austin.) 

Mr. Schaefer: Wait until I finish my question. 

Q. (Continuing) So that it was in good condi- 
tion and [360] ready for use. 

Mr. Combs: I don't understand what the ques- 
tion is. May we have the question again? 

Mr. Schaefer: Will you read the question, Mr. 
Reporter ? 

(Question read by the reporter.) 

Q. By Mr. Schaefer: And in good condition 
and ready for use. 

A. I couldn't hazard a guess, unless T was more 
familiar with the minute condition of the property 
than I was. 

Q. You weren't familiar with the minute con- 
dition of this property, then? A. No, sir. 

Q. Are you familiar with any instance in which 
Hagenback- Wallace rented out their sleeping cars? 

A. Not Hagenback-Wallace. 

Q. Are you familiar with any other circus com- 
pany renting out its cars? A. Yes. 

Q. What company? [361] 

A. I would have to make a little explanation in 
connection with that. 

Q. Can you tell me what company, first? 

A. With the American Circus Corporation. We 
operated several shows, and we rented, I think, 
some cars from each one of the shows to a carnival 
put out during the summer. 

Q. How many such contracts are you familiar 
with, how many times? 



Hagenbeck-Wallace Shows Co. 233 

(Testimony of J. V. Austin.) 

A. I think we only did it twice. 

Q. And that is what you base your knowledge of 
the custom on? A. Yes, sir. 

Q. When you say the equipment looked usable, 
you made just this one-minute inspection you spoke 
about? A. Non-minute. [362] 



JACK W. KRAMER, 

called as a witness on behalf of defendant, being 
first duly sworn, testified as follows: 

The Court: Your name? 

A. Jack W. Kramer. 

Direct Examination 

Q. By Mr. Schaef er : What is your business or 
occupation at the present time? 

A. At the present time I am working as a labor 
conciliator of the American Federation of Labor. 

Q. In the latter part of May of 1939 what was 
your business or occupation? 

A. I was the representative of the American 
Federation of Actors in the circus division, from 
Canada to Mexico, for the American Federation of 
Actors. 

Q. Are you familiar with the Great American 
Circus that was produced in May of 1939? 

A. Very much so. 

Q. Did you see that circus out at Inglewood? 

A. Yes. sir. 



234 Fanchon & Marco, Inc., vs. 

(Testimony of Jack W. Kramer.) 

Q. Bid you have a conversation with Mr. Marco 
Wolff in connection with that circus'? 

A. Out there, you mean? 

Q. At any time. A. Yes, sir. [364] 

Q. Where? 

A. In his office, when I contacted him to take out 
a closed contract for the circus. 

Q. And did you see him on any other occasion? 

A. Yes, sir ; I saw him on the grounds. 

Q. Where? A. Out at Inglewood. 

Q. Did you have a conversation with him there? 

A. Yes, sir. 

Q. Who was present on that occasion ? 

A. Well, I can't recall the names, it has been so 
long ago, but I believe there was a man, the manager 
of the circus. 

Q. Mr. Clawson? A. Clawson is the name. 

Q. Will you relate that conversation? 

A. I told him about wanting a closed contract 
for the men, that most of our men were already in 
it. He said at the present time that he had been so 
involved in fixing the circus over, so that it would 
be possible to present a show under the canvas, that 
he wanted to know if I would give him a little ex- 
tension of time, until such time as they could know 
whether or not they could afford to pay the price 
that we wanted for the men, and whether or not they 
could see their way clear that they could organize 
and unionize the circus. So I told him that in the 
event [365] that he did not organize immediately in 



Hagenbeck-Wallace Shoivs Co. 235 

(Testimony of Jack W. Kramer.) 
that town, or not later than the next town, it would 
be an utter impossibility for him to go into San 
Francisco with the show, because he wouldn't have 
a chance to even open there, much less show in the 
town, that they would not be as lenient with him as 
I was. 

Q. Have you had any experience with circuses? 

A. I have had about 27 years of it, yes, sir. 

Q. Have you been a performer ? A. Yes, sir. 

Q. Did you see this circus equipment? 

A. I did. 

Q. Will you state what you saw? 

Mr. Combs: That is objected to. 

Mr. Schaefer: Well, he has had 27 years of ex- 
perience with circuses. 

Mr. Combs: That is not a proper foundation for 
an opinion yet. He can say what he saw. 

The Court : He can state what he saw. 

Mr. Schaefer: Go ahead. 

A. I saw the big top in the process of going up, 
and I saw the men putting up the side walls and 
guying the ropes, and I saw the juice wagon and the 
ticket wagon; I saw T the animal wagons; I saw the 
dressing room tents, where the horses and per- 
formers were, and I had occasion to go down on the 
tracks and see these so-called sleepers they [366] 
had there, that I forbade my people on the show to 
sleep in them. 

Mr. Combs: Oh 

The Court : That will be stricken. Just answer the 
questions. 



236 Fanchon & Marco, Inc., vs. 

(Testimony of Jack W. Kramer.) 

Q. By Mr. Schaef er : Will you describe the sleep- 
ing cars there that you saw ? 

A. Well, there was nothing in there other than 
being very, very dirty, and they had a box down on 
one end of the platform, where I had to step on it 
to get onto the first step. Then when w T e went in it 
seemed like there was straw in the ticking; instead 
of being a mattress, it was a straw ticking for them 
to lay on, and I didn't see anything else, or there 
was no covers or anything else. I suppose there 
was . [367] 

Q. By Mr. Schaef er: At Inglewood, did you say? 

A. No. It was over at Pomona. 

Mr. Schaef er: He said the opening day. 

Mr. Combs : He is talking about Pomona now. 

The Witness: You asked me if I had been any 
other place other than the opening day, and I be- 
lieve Pomona was the town the circus closed in. 

Mr. Schaef er: It has been stipulated that that is 
the place. 

The Witness : Yes. 

Q. By Mr. Schaef er: Did you have a conversa- 
tion with anyone there ? 

A. Yes. 

Q. Was Mr. Clawson present? 

A. No, sir. Mr. Clawson was on the inside with 
this other gentleman you mentioned before, Marco. 

Q. At the time you closed the circus did you have 
a conversation with Mr. Clawson, or was he present ? 



Hagenbeck-Wallace Shows Co. 237 

(Testimony of Jack W. Kramer.) 

A. Mr. Clawson was present, and then he kept 
on leaving and coming back, and coming back and 
leaving, to oversee some of the other things going 
on on the inside. They were kind of late for the 
show, and he kept on going back and forth. 

Q. Did you state at that time w T hy the circus was 
being [369] closed? A. Yes, sir. 

Q. To Mr. Clawson? 

A. To Mr. Clawson and to Mr. Marco as well. 
Mr. Marco kept referring me to Mr. Clawson, be- 
cause he said he was not familiar with circuses. 

Q. What did you say to Mr. Clawson in that 
regard? 

A. I told him we would have to close the circus 
or be sure the men were all organized. 

Q. Did you give him any other reason than that ? 

A. Yes, we would have to close it. I told him 
there would have to be several repairs made before I 
would allow my performers to perform in the show. 

Q. I take it this was a conversation with Mr. 
Clawson ? 

Mr. Combs : It is self-serving. 

The Court: Proceed. 

Q. By Mr. Schaefer: Go on with the conversa- 
tion where you left off, Mr. Kramer, and what you 
said in regard to closing to Mr. Clawson. You stated 
that several repairs had to be made. Did you men- 
tion them? 

A. Yes. 

Q. What did you say? 



238 Fanchon & Marco, Inc., vs. 

(Testimony of Jack W. Kramer.) 

A. I told him I wouldn't allow anything to be 
attached to one pole that was on the end of the big 
top down around the entrance, that seemed to be 
so cracked — in fact it was cracked — and they had 
two bands of iron, one at the [370] top of the place 
where it had been split, and it split all the way 
through, and a band of iron on the bottom of it. 

Q. Was this the main pole? 

A. One of the quarter poles. [371]' 



CHARLES E. CUNNINGHAM, 

called as a witness in behalf of defendant, being first 
duly sworn, testified as follows : 

Direct Examination [376] 

Q. Did you work in this capacity for the Great 
American Circus ? A. Yes, sir. 

Q. Did you have an opportunity to notice the 
condition of the seats ? A. I did. 

Q. Where did you join the circus — in Ingle- 
wood? A. Yes, sir. 

Q. Did you follow through to Pomona'? 

A. Yes, sir. 

Q. Did you help erect seats in each one of the 
places? A. Yes, sir. 

Q. Will you tell us the condition of the seats as 
you saw them? 

A. Well, the condition of the seats was such that 
it would retard the erection of the seats in the 



Hagenbeck-Wallace Shotvs Co. 239 

(Testimony of Charles E. Cunningham.) 

proper length of time that was necessary to erect 

them. 

Mr. Combs : I ask that all of that be stricken. 

The Court : Yes, I will strike it. 

Q. By Mr. Schaefer: Tell us the condition of the 
seats. What was the matter with them, etc. ? 

A. Well, the jacks were misfits, that is, the open- 
ing [377] in the jacks was of various widths. 

Q. What is a jack? 

A. A jack is what holds up the stringers that you 
put the bible backs on, and then you set your chairs 
on top of the bible backs. 

Q. What was the matter with them? 

A. They were misfits. There were various widths 
in the openings, and in order to erect the stringers 
on the jacks you would have to choose various and 
sundry jacks to make them fit on one stringer, and 
some of the jacks were in such shape that you had 
to use them in such a manner that they would be 
strong enough to be used. 

Q. Did this cause any delay? 

A. Yes, it delayed the erection of the seats. 

Q. Did you examine the cross members? 

A. The cross members — you mean the bible 
backs ? 

Q. Yes. 

A. Yes. They were frayed on the ends, frayed by 
continuous use over a duration of time, and they be- 
come worn and frayed. And may I say what is the 
natural action in starting and shipping out in the 
spring ? 



240 Fanchon & Marco, Inc., vs. 

(Testimony of Charles E. Cunningham.) 

Q. If you know the custom. 

A. To see that all those frayed ends are taken 
care of and all worn planks are replaced, so that 
they are in good shape, good condition. 

Q. Was that done in the case of the equipment 
used by [378 J the Great American Circus? 

A. No, sir, it showed no signs of being put in 
usable condition. 

Q. Did you see the decks of the flat cars? 

A. I did. 

Q. What condition were they in? 

A. They were in aged condition. I didn't ex- 
amine them closely enough to see if they had any 
holes in the decks, but they w T ere in aged condition, 
and just like any aged material, it is apt to give 
way. 

Mr. Combs : That part is a conclusion. 

Q. By Mr. Schaefer: You didn't examine them 
for holes? 

A. No. I observed the wagons coming off the 
flats, and their action gave me the conclusion that 
there were holes in the flats, or weak spots. 

Mr. Schaefer: Cross examine. 

Cross Examination 

Q. By Mr. Combs: These seats were inspected by 
the seat inspector at Pasadena, weren't they? 

A. Yes, sir, he was there. 

<J. And passed, too? 

A. After we had tried our best to put them in 
the proper condition, yes. 



Hagenbeck-Wallace Shows Co. 241 

(Testimony of Charles E. Cunningham.) 
Q. But they passed inspection? 
A. Yes, but after a certain length of time. [379] 



CHARLES H. PRIEST, JR., 

called as a witness in behalf of defendant, being 
first duly sworn, testified as follows : 

Direct Examination [398] 

Q. Did you observe the equipment out there in 
May of 1939? A. Yes, sir. 

Q. What did you observe, first, with respect to 
the wagons? A. In what respect? 

Q. Well, the wheels. 

A. They were all in very poor condition. 

The Court : Just tell us what you found, not your 
conclusion. 

Q. By Mr. Schaefer: In other w T ords, why did 
you come to any conclusion? We don't want the con- 
clusion, but we want to know the things that you 
saw, that you observed. 

A. Well, the wheels on the wagons were in very 
bad shape. 

The Court: That doesn't mean anything. I can't 
give [399] consideration to that. 

Q. By Mr. Schaefer: In what way, Mr. Priest? 

A. The whole point, of course, is that it would 
be very hard for me to answer that question, because 
primarily I was interested in selling the mer- 
chandise. 



242 Fanchon & Marco, Inc., vs. 

(Testimony of Charles H. Priest, Jr.) 

The Court : I am not concerned about that. 

Q. By Mr. Schaefer: Did you make any observa- 
tion of the axles ? Could you determine from looking 
at the wagons anything about the axles ? Did you ob- 
serve the way the wheels slanted? 

The Court: Let him state just what he saw. 

A. Well, I could see that the wheels did slant out 
at the bottom, where they should have slanted in. 
The set was out on a number of the wheels. And the 
wheels themselves were in poor condition. 

Mr. Combs: That is objected to again. 

Mr. Schaefer: I submit, your Honor, he is telling 
what he saw. 

The Court: But I don't know what "poor" means, 
or w T hat it means to him. 

A. The wheel itself should be in perfect condi- 
tion, the spokes should be tight, and the fellies 
should be tight. 

The Court: Tell us what you saw. Were the 
spokes loose? 

A. I couldn't say, but the tires were loose on the 
fellies. [400] 

The Court : You say they were ? 

A. Yes, sir. [401] 

Q. By Mr. Schaefer: Were you present when the 
equipment was loaded on the cars? 

A. No, sir. 

Q. You were not? A. No, sir. 

Q. Did you send out any articles to Baldwin 
Park? A. Yes, sir. 



Hagenbeck-Wallace Shows Co. 243 

(Testimony of Charles H. Priest, Jr.) 

Q. For repairs? A. Yes, sir. 

Q. Do you have a copy of any invoices or any- 
thing which would indicate what you sent out ? 

A. Yes, sir. 

Q. Can you refresh your recollection from them? 

[402] 

A. I would have to get them out of my brief 
case. I brought them up for that purpose. 

The Court: Get your brief case. I thought those 
items w^ere admitted. 

Mr. Combs: We will admit any items that 

Mr. Schaefer: They haven't been. 

Mr. Combs: I think we actually paid for most of 
them. It was over a thousand dollars. 

Mr. Schaefer: I don't think so. 

The Witness : Do you want me to enumerate 

The Court : Just pick out the bills and show them 
to counsel, and they can be marked as an exhibit. 

A. These are the original sales sheets of our 
records, which, as a record, must be returned to our 
files, for our files there, after the case is over. That 
wants to be stipulated, your Honor. 

The Court : Well, that is up to you. 

The Witness : We have to have these records back 
for our files. 

Mr. Combs : The court might have to have them. 

The Court: If the court gets its mark on them, 
we won't give them back. 

The Witness: I can give you copies of them, but 
I can't give you the originals. We have to have them 
in our files. 



244 Fanchon & Marco, Inc., vs. 

(Testimony of Charles H. Priest, Jr.) 

Mr. Combs: Did Fanchon & Marco pay all of 
these bills, [403] or is this some of the bills we paid? 

Mr. Schaefer: I don't know until he reads them. 
I have some that we paid. 

The Court: They are all included in this state- 
ment? 

Mr. Combs: I will take counsel's word for those 
they paid. 

Mr. Schaefer: All right. They are all included in 
the statement, and they have all been paid for. 

The Court : He says that he will concede that you 
furnished and paid for them, so you can take your 
bills back. 

The Witness: O. K., sir. 

Q. By Mr. Schaefer: Did you see the circus at 
San Diego? 

A. No, sir. 

Q. Did you see it at Santa Ana ? A. Yes, sir. 

Q. Did you see the equipment leave the train? 

A. Yes, sir. 

Q. Did you see any of the wagons on the road? 

A. Yes, sir. 

Q. Did you notice anything particular about any 
of the wagons, or wagon? Did you notice any 
wheels 

Mr. Combs: That is leading and suggestive, I 
think. 

The Court: Answer. 

A. Not while they were being unloaded off the 
train. [404] 

Q. By Mr. Schaefer: On the street? 



Hagenbeck-Wallace Shotvs Co. 245 

(Testimony of Charles H. Priest, Jr.) 

A. On the street, yes, sir. 

Q. What did you see? 

A. One wagon that they were pulling down Main 
Street in Santa Ana, the wheel was in such con- 
dition that 

The Court: Just what condition was it in? 

A. The bushing was smoking, apparently worn 
out. 

The Court: Not apparently. 

Q. By Mr. Schaefer: Did it appear to be worn? 
Or couldn't you tell by looking? Did you examine 
the wheel? 

A. They took the wheel off after they got down 
to the lot, and the bushing was all broken. 

Q. Did you see it then? A. Yes, I did. 

Q. Were you alone when you saw this wheel 
smoking, or was someone with you? 

A. No. Mr. Daillard was with me. 

Q. Did you observe the wagon later? 

A. Yes, sir. 

Q. When? 

A. At the shop on the show lot in Santa Ana. 

[405] 

Q. Did you supply any rope — did Mr. Daillard 
order any rope from you on that occasion, at Pasa- 
dena? 

A. He ordered some. Ordinary rope, you mean, 
for the top ? 

Q. Yes. 

A. There were a number of coils, I think, fur- 
nished in Pasadena, if I recollect right. 



246 Fanchon & Marco, Inc., vs. 

(Testimony of Charles H. Priest, Jr.) 

Q. Was this equipment furnished at one time or 
at one place, or during different times ? 

A. Oh, no ; different times. 

Q. At each stop? A. That is right. 

Q. Did you send equipment to San Diego? 

A. No, sir. 

Q. But to Santa Ana? A. Yes, sir. [406] 

Q. Pasadena? A. Yes, sir. 

Q. Some to Pomona? A. Yes, sir. 

Q. Did you send some out to Inglewood? 

A. Yes, sir. 

Q. By Mr. Schaefer: Do you handle rope? 

A. Yes, sir. 

Q. How long have you handled rope ? 

A. Possibly 20 years. 

Q. Have you had occasion to examine rope dur- 
ing that time ? A. Yes, sir. 

Q. Did you examine the rope in this circus? 

A. I had occasion to examine, check pieces of 
rope on the circus. 

The Court: When? [407] 

A. At Pasadena, 

Q. By Mr. Schaefer : What was the condition of 
the rope? 

A. It was dry-rotted. 

Q. Dry-rotted? A. Yes. 

Q. Did you state that to anyone? 

A. Yes, sir. 

Q. To whom? 

A. Mr. Daillard and Mr. Eagles. 



Hagenbeck-Wallace Shows Co. 247 

(Testimony of Charles H. Priest, Jr.) 
Q. Did you tell it to Mr. Clawson? 
A. Yes, sir. 
Mr. Schaefer: You may cross examine. [408]' 



WALTER S. GUICE, 

a witness of lawful age, being produced, sworn and 
examined on the part of the defendant, on his oath 
deposeth and saith: 

Direct Examination 
By Mr. Arthur: [417] 

Q. Can you tell us what the main falls are*? 

A. The main falls holds the big top and the 
riggings. 

Q. What is a fall % A. Pulley block and rope. 

Q. That holds the main circus tent'? 

A. That is right, and the canvas and the rigging ; 
there is four of them. They had a four-pulley top, 
one at each pole. 

Q. Is that the rope upon which all the riggings 
of the various acts and equipment are supported'? 

A. Yes, sir, where all the big riggings is hung, 
and then they have a ring that they hang on the 
quarter pole. 

Q. And your rigging was supposed to be hung 
onto what % A. From the pole ring of the big top. 

Q. Why did you refuse to go up that night? 

A. The main fall on the center pole on which our 
rigging was hung was bad and I wouldn't take no 
chances on it. 



248 Fanchon & Marco, Inc., vs. 

(Deposition of Walter S. Guice.) 

Q. What was wrong with it f [422] 

A. The ropes showed dry rot. 

Q. That is, the rope? A. Yes, sir. 

Q. What was the condition of the rope? 

A. It was frayed out and didn't look safe. 

Q. And you and the members of your act refused 
to go up because of the condition of the rope ? 

A. That is right, We called for the manager of 
the show and asked him about a chain to lash the 
bale ring of the big top to the center pole so if the 
rope would break it wouldn't come down, w T hich 
he did. 

Q. The rope of which you speak, if that rope 
were, as you say in bad condition, that was the main 
supporting rope of the tent itself, wasn't it? 

A. Of that one piece, yes, sir. 

Q. On the center pole? A. Yes, sir. [423] 

Cross Examination 

Q. Had you noticed the condition of the main 
falls before that time? 

A. No, sir, until I seen them break putting up, 
and then I went up and examined them when they 
had my rigging up. I seen them break when I put 
the rigging up and I examined them. 

Q. What condition did you find them in when 
you examined them? 

A. Dry rot, indicating they had been laying 
around and not used. 

Q. Can you explain a little more fully what you 
mean by dry rot? 



Hagenbeck-Wallace Shoivs Co. 249 

(Deposition of Walter S. Guice.) 

A. This rot exists after it is in a real dry place. 
It is manila rope, and they generally put a little tar 
in it and it drys out, just like you put grease in the 
cable, and it lays there and dries out, and dust gets 
in there and cuts the fiber and it eventually gets dry, 
and when it gets [432] dry it is just like powder; it 
falls apart. Manila rope is oiled; it has some kind 
of oil in it, and if you aren't using it it dries out and 
causes dry rot. Dust gets in it and cuts it, and they 
break up from being pulled over iron sticks or iron 
edges, and that cuts the fibers, and it finally 
weakens. [433] 

Recross Examination 

A. Since you asked me I will tell you : The ridge 
ropes were bad. Of course, that doesn't have any- 
thing to do with the canvas ; that is only to raise the 
poles with, and after you get it raised the ridge rope 
would be slacked off; that is on a pulley, see? That 
is the condition I saw in Pasadena ; that is the con- 
dition it was in. 

Mr. Combs : I move that the last part of that an- 
swer "That is what the condition was in Pasadena" 
be stricken from the record. That is not responsive 
to any question, and is a statement of a conclusion 
on the part of the witness. [434] 



250 Fanchon dc Marco, Inc., vs. 

DEFENDANT'S EXHIBIT No. 1 

AGBEEMENT 

This Agreement, made and entered into this 11th 
day of May, 1939, between Fanchon & Marco, Inc., 
hereinafter referred to as First Party, and Glen- 
dale Post #127, Ltd., hereinafter referred to as 
Second Party, 

Witnesseth : 

Whereas, the parties hereto desire to enter into 
an agreement whereby First Party shall arrange, 
stage, produce, furnish and deliver a three-ring 
circus, under canvas, for presentation in the City of 
Glendale, Calif., on the dates of June 1st, 1939, with 
afternoon and evening performances, on a location 
designated as San Fernando Eoad and Allen Ave., 
and hereinafter referred to as "the location"; and 

Whereas, Second Party agrees to sponsor said 
circus under its auspices. 

Now, Therefore, in consideration of the promises 
herein contained, the money to be paid First Party 
by Second Party, and the services to be rendered 
by the First Party, it is mutually understood and 
agreed as follows, to wit: 

First Party Agrees At Its Own Expense As 
Follows : 

1. To transport, deliver and erect at "the loca- 
tion" all and complete equipment necessary to pre- 
sent a three-ring circus under canvas, and a com- 
plete sideshow, and to take away said equipment on 



Hagenbeck-Wallace Shows Co. 251 

completion and leave "the location" in a clean 
condition; 

2. To stage and produce a three-ring circus last- 
ing a minimum of two hours and consisting of ap- 
proximately twenty-six (26) displays of circus 
entertainment, and including a brass band to play 
for the entire performance, afternoon and evening. 

3. To supply an adequate amount of circus 
posters and to post the same in suitable locations; 
to supply copies and mats for newspaper ads and 
press material; 

4. To direct the publicity; 

5. To supply all necessary administrative serv- 
ices including an auditor, advance agent, press 
agent, business manager and ticket sellers. 

6. To supply the general admission tickets ; 

7. To furnish two toilets (one for men and one 
for women). 

8. To pay all salaries for the artists and acts, 
labor, transportation, cartage and administrative ex- 
penses, including all taxes, levies or assessments, 
levied under so-called Social Security Acts or Un- 
employment Insurance Laws, and First Party 
agrees to hold Second Party harmless from any 
claims and demands by any competent authority for 
all or any part of such levies or assessments. 

9. To pay all federal taxes upon admissions; 

10. To carry all necessary Workmen's Compen- 
sation Insurance. 

Second Party Agrees At Its Own Expense As 
Follows : 



252 Fanchon & Marco, Inc., vs. 

1. To supply a suitable location and to procure 
the license to conduct said Circus ; 

2. To produce the advance tickets and to con- 
duct and carry on an advance ticket sale at least 
two weeks prior to the date of the first performance. 

3. To furnish any additional toilets required by 
law over and above the two furnished by First 
Party. 

4. To furnish adequate police and fire pro- 
tection ; 

5. To furnish active working committees re- 
quested by First Party. 

Both Parties Hereto Agree to the Following: 

1. The Gross receipts from the sale of all ad- 
vance exchange tickets, all gate admissions, includ- 
ing the side show, after deduction of federal taxes 
shall be divided seventy percent to the First Party 
(70%) and thirty percent (30%) to the Second 
Party. 

2. Second Party agrees to pay to First Party 
all monies received from said advance ticket sale up 
to the sum of $1,500.00 and said $1,500.00 is then to 
become such a sum portion of the First Party's sev- 
enty percent (70%) share of the gross receipts re- 
ferred to in the preceding paragraph. 

If, by the sale of advance tickets, this sum to be 
given by Second Party to First Party does not 
reach the sum of $1,500.00, then first Party is to 
take out of the general admissions a sum equal to 
the difference between the total sum received for 
the sale of advance tickets and $1,500.00 and in such 



Hagenbeck-Wallace Shows Co. 253 

event, said $1,500.00 shall be such a sum portion of 
the First Party's Seventy Percent (70%) share of 
the gross receipts referred to in the preceding para- 
graph in this agreement. 

3. First Party will furnish without cost to Sec- 
ond Party an advance ticket man who will assist 
Second Party in its ticket campaign and will aid 
and act as advisor to Second Party. 

4. No concessions shall be maintained on the lo- 
cation except those operating under the license or 
consent of the Second Party, and all revenue from 
the sale and operations of such concessions shall be 
exclusively retained by the Second Party. Unless 
otherwise agreed to, the only concessions to operate 
on the location shall be as follows: 



Hot Dogs 


Balloons 


Hamburgers 


Canes 


Lemonade 


Whips 


Soft Drinks 


Hats & Novelties 


Coca Cola 


Souvenirs 


Popcorn 


Frozen Custard 


Candy 


Tintypes 


Cracker jack 


Guess Your Weight 


Ice Cream Bars & 


Scale 


Cones 


Candy Floss 


Peanuts 


Parking 



5. While it has been agreed that First Party 
shall direct the publicity, it is understood that in 
most instances the best publicity can be obtained on 
the application of the Second Party owing to its 



254 Fanchon & Marco, Inc., vs. 

local position with the press, etc., and the Second 
Party agrees to fully cooperate with the First 
Party in obtaining the best publicity and First 
Party agrees to defray seventy percent (70%) of 
the cost of local newspaper advertising and Second 
Party agrees to pay thirty percent (30%) of the 
cost of such local newspaper advertising. 

6. First Party agrees to carry policy of Public 
Liability Insurance, insuring parties hereto against 
any claims for injuries to persons or property. Sec- 
ond Party also agrees to carry policy of Public Lia- 
bility Insurance, insuring parties hereto against 
any claims for injuries to persons or property. 

7. It is understood and agreed that circum- 
stances beyond the control of the First Party, such 
as fire, flood, transportation delay, strikes, war or 
what is defined in law as "Act of God", shall be an 
excuse for non-performance hereunder by either of 
the parties hereto, and in such event neither of the 
parties hereto shall be liable to the other for such 
non-performance. 

8. This agreement shall be binding upon the 
heirs, administrators, assigns and successors of the 
parties hereto. 

FANCHON & MARCO, INC. 

By 

GLENDALB POST #127 AMN. 
LEGION 

By ARNOLD R. SEIFERTS, 

Commander. 

[Endorsed] : Filed Nov. 22, 1940. 



Hagenbeck-Wallace Shows Co. 255 

DEFENDANT'S EXHIBIT No. 2 

Agreement dated May 4, 1939, between Fan- 
chon & Marco, Inc. and Long Beach Pyramid 
No. 43, A. E. O. S. Filed in the District Court 
November 22, 1940. 



DEFENDANT'S EXHIBIT No. 3 

Agreement dated May 27, 1939, between Fan- 
chon and Marco, Inc. and Napa Post 113, 
American Legion. Filed in the District Court 
November 22, 1940. 



DEFENDANT'S EXHIBIT No. 4 

Agreement dated May 29, 1939, between Fan- 
chon & Marco, Inc. and American Legion Post 
#13. Filed in the District Court November 22, 
1940. 



DEFENDANT'S EXHIBIT No. 5 

Agreement dated May 19, 1939, between Fan- 
chon & Marco, Inc. and Charles Eoe Post #30 
of the American Legion. Filed in the District 
Court November 22, 1940. 



256 Fanchon & Marco, Inc., vs. 

DEPENDANT'S EXHIBIT No. 6 

Agreement dated May 29, 1939, between Fan- 
chon and Marco, Inc. and Oakland American 
Legion Committee. Piled in the District Court 
November 22, 1940. 



DEPENDANT'S EXHIBIT No. 7 

Agreement dated May , 1939, between Fan- 
chon & Marco, Inc. and Santa Ana Lodge #794 
B. P. O. E. Piled in the District Court Novem- 
ber 22, 1940. 



DEPENDANT'S EXHIBIT No. 8 

Agreement dated May 29, 1939, between Fan- 
chon & Marco, Inc. and William J. Quinn. 
Filed in the District Court November 22, 1940. 



DEPENDANT'S EXHIBIT No. 9 
Agreement dated May 16, 1939, between Fan- 
chon and Marco, Inc. and Santa Monica Cities 
Post 123, American Legion. Filed in the Dis- 
trict Court November 22, 1940. 



DEPENDANT'S EXHIBIT No. 10 

Agreement dated May 18, 1939, between Fan- 
chon & Marco, Inc. and Ventura Lodge #1430 



Hagenbeck-Wallace Shotvs Co. 257 

B. P. O. E. Elks. Filed in the District Court 
November 22, 1940. 



DEFENDANT'S EXHIBIT No. 11 

Agreement dated May 6, 1939, between Fan- 
chon & Marco, Inc. and D. M. Price. Filed in 
the District Court November 22, 1940. 



DEFENDANT'S EXHIBIT No. 12 

Agreement dated May 6, 1939, between Fan- 
chon & Marco, Inc. and Inglewood Council of 
Parents and Teachers. Filed in the District 
Court November 22, 1940. 



DEFENDANT'S EXHIBIT No. 13 

Agreement dated May 2, 1939, between Fan- 
chon & Marco, Inc. and Bakersfield, California 
Lodge No. 266 B. P. O. Elks. Filed in the Dis- 
trict Court November 22, 1940. 



258 Fanchon & Marco, Inc., vs. 

DEFENDANT'S EXHIBIT No. 14 

The following telegram was sent to: 
Mr. Everett M. Glenn, 709 Capital Bank Bldg., 

Sacramento, Calif. 
Mr. Bert Ronzee, Commander, American Le- 
gion, 1762 Elm St., Napa, California. 
Mr. Ray L. Johnson, Sacramento Memorial 

Mausoleum, Stockton Blvd., at El Paraiso, 

Sacramento, Calif. 
Mr. Fred S. Dean, 400 American Avenue, Long 

Beach, Calif. 
Mr. Freed Hair, Pyramid #43, Sciots, Long 

Beach, California. 
Mr. Arnold R. Seifert, Commander Post 127, 

American Legion, Glendale, Calif. 
Mr. W. F. May, Post #123, American Legion, 

Santa Monica, Calif. 
Mr. W. F. May, 12216 Dorothy St., Brentwood 

Heights. 
Mr. Don Price, Ryans Auditorium, Fresno, 

California. 
Mr. John R. Huff, B. P. O. Elks, Bakersfield, 

Calif. 
Mr. Russell T. Petis, B. P. O. Elks, Bakers- 
field, Calif. 
Mr. W. E. McNeil, Ventura Lodge 430, B.P.O. 

Elks, Ventura, Calif. 
Mr. A. F. Spring, Ventura Lodge 430, B. P. O. 

Elks, Ventura, Calif. 



Hageribeck-Wallace Shows Co. 259 

Mr. Elmer P. Zollner, c/o American Legion 
Convention Headquarters, American Le- 
gion Memorial Bldg., Oakland, Calif. 

Kramer of American Federation of Actors has 
called out acts which are members of his organiza- 
tion. This and other labor difficulties which have 
caused us to miss matinee performances in Santa 
Ana and Pasadena necessitates us advising you with 
regret we will be unable to fulfill contract for 
Circus performance. One of our men will contact 
you later. 

FANCHON & MARCO, INC. 
Sent the night of Pomona Performance, May 31, 
1939. 

[Endorsed] : Filed Nov. 22, 1940. 



MURRAY PENNOCK, 

called as a witness in behalf of plaintiff: in rebuttal, 
being first duly sworn, testified as follows: 

Direct Examination 
Q. By Mr. Combs: You have been sworn? 
A. I have. 

Q. What is your occupation, Mr. Pennock? 
A. The show and theatrical business. 
Q. How long have you been engaged in that 
business? A. Oh, nearly 30 years. 



260 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 

Q. In what capacities? 

A. In a managerial capacity, I should say, gen- 
erally. 

Q. With what circuses'? 

A. Well, going back to 1908 and stating them 
in chronological order, Norris & Eowe, Sells-Floto, 
Bud Atkinson in Australia, and Al G-. Barnes for 
12 consecutive years, and maybe one or two others 
I missed — Irwin Brothers Wild West, and one or 
two experiences intervening. 

Q. Were you present at Baldwin Park in the 
week preceding the 23rd of May, 1939? 

A. Yes, I was. 

Q. Who were you with at that time? [438] 

A. I was out at the winter quarters on the 
Sunday preceding the opening of the Great Amer- 
ican Circus. 

Q. Did you have occasion at that time to ob- 
serve any circus equipment? A. Yes, I did. 

Q. What was the occasion for your making that 
observation ? 

A. Well, I walked around the lot. Naturally, 
having been in the circus business all those years, 
I was interested, and I walked about the lot a good 
deal with Mr. Clawson. I also talked casually to 
Mr. Eagles and to Mr. Daillard. 

Q. Did you take a look at the equipment at that 
time? 

A. I looked at the equipment closer previously. 

Q. How long previously? 



Hagenbeck-Wallace Shows Co. 261 

(Testimony of Murray Pennock.) 

A. Oh, perhaps a month or six weeks previ- 
ously. 

Q. Were you familiar with its condition at that 
time? A. Yes. 

Q. Will you state what the condition of the 
wagons was? 

A. May I explain ? I came out there — I had been 
engaged by M. G. M. as technical adviser of their 
circus picture they were preparing, and they had 
asked me to set up a typical show of a certain size, 
and after that was done they talked about the 
rental of equipment which was available in vari- 
ous places, and I suggested that we go out to Bald- 
win Park and look over the equipment there, which 
Mr. [439] Clawson had told me was for rent. I 
took two draftsmen, whose names I have forgotten 
now, and Stan Rogers, who was one of the art direc- 
tors at M. G. M., out there on two or three occa- 
sions. 

Q. At that time you examined this equipment 
minutely, did you not? 

A. More or less minutely, yes. 

Q. What was its condition ? Was it in good con- 
dition, suitable for use at that time ? 

Mr. Schaefer: I will object to that, on the ground 
that there is no showing that the equipment was 
that of the Great American Circus, or that it was 
an examination of all of the equipment. 

The Court: If he examined all of it, it would be 
proper. Did you examine all of the equipment? 



262 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 

A. All of the equipment with respect to the rol- 
ling stock, the wagons about which we are now 
talking. 

The Court: About how many wagons? 

A. At that time I believe there were 40 or 50 
wagons on the lot. 

The Court: Overruled. 

A. Many of these wagons were old Al G. Barnes 
wagons which had been relegated to the back of the 
lot and were obsolete, some of which, as a matter 
of fact, I built. But the Hagenback-Wallace equip- 
ment I think we went over pretty thoroughly. The 
draftsmen were interested from the stand- [440] 
point of making drawings, presumably to fill in the 
archives out at the studio, should the occasion arise 
for building wagons in the future. 

Mr. Schaefer: I submit that that isn't an answer 
to the question. 

The Court: That is argument. What condition 
was it in? 

A. The wagons, all of the Hagenback- Wallace 
wagons were in comparatively good condition. 

Q. By Mr. Combs: Suitable for use? 

A. Suitable for use. 

Q. Did you examine the flat cars at that time? 

A. I saw the flat cars, yes. 

Q. What wais their condition? 

A. The flat cars were in equally good condition. 

Q. Did you examine the rigging, tents, drops 
and falls? 



Hagenbeck-Wallace Shows Co. 263 

(Testimony of Murray Pennock.) 

A. Not minutely, no. I saw the ropes and rigging 
coiled in one of the barns. I saw the canvas rolled 
up, but I did not examine it closely, no. 

Q. Did you have an opportunity to observe this 
equipment again after that date at Baldwin Park? 

A. I went out to the opening of the show at 
Ingiewood, both afternoon and evening. I left the 
studio and spent possibly 45 minutes to an hour on 
the lot in the afternoon, while the show was being 
prepared, and I went back again about the dinner 
hour in the evening, and remained until it had been 
partially torn down at night. I left there [441] 
about 12:30 or 1:00 o'clock the following morning 
after the performance. 

Q. Did you see the equipment there? 

A. Yes. 

Q. What was its condition then, generally ? 

A. I thought it was in perfectly usable condi- 
tion, such of it as I saw. 

Q. What did you see? 

A. I saw the big top in the air. I saw many of 
the wagons, in fact all of the wagons, I think. I 
saw the seats. I saw the poles and the other para- 
phernalia incident to the erection of the tent, and 
the stage, and ring curbs, and all those properties, 
in use. I looked the show over generally, as an ex- 
showman would. 

Q. All of that show and equipment was in use 
at that time, too, was it not? 



264 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 

A. As far as I know, yes. All of it I saw was 
in use. 

Q. Did you see the show again after that date? 

A. I saw the show in Pasadena on the after- 
noon of Memorial Day. 

Q. Did you observe the main fall rope break 
there? A. No, sir. 

Q. Did you observe the show erected? 

A. It wasn't erected. The side show was up, 
and they were putting up the big top at the time I 
went over there. At the time I normally expected 
the doors to be open the [442] big top was in process 
of erection at that time, and I was there for an 
hour and a half, and very little or no progress was 
made in that hour and a half, so I departed for 
home. 

Q. In the circus business is it the custom to 
rent sleeping cars with or without berth curtains, 
pillow cases, sheets and blankets? 

A. I have on occasion rented circus sleepers, 
and am more or less familiar with the practice in 
that connection, and I know of no instance within 
my knowledge where sleepers, circus sleepers, as 
such, are rented completely equipped. 

Cross Examination 

Q. By Mr. Schaefer: Mr. Pennock, how long 
did your examination take you a month previous 
to the Sunday you were out? 

A. I was out there on three occasions, I be- 



Hagenbeck-Wallace Shows Co. 265 

(Testimony of Murray Pennock.) 

lieve, as I stated. I think each time we spent from 

two to three hours. 

Q. How long a time did you spend examining 
wagons ? 

A. Well, fully half of the time was spent on 
the examination of the wagons. 

Q. How many wagons did you want"? 

A. Did we want? [443] 

Q. Yes. 

A. Well, that was problematical, because at that 
time no definite decision regarding the size of the 
show to be portrayed on the screen had been ar- 
rived at. 

Q. Did you ever rent any of this equipment ? 

A. Not that I know of, no. 

Q. Your studio didn't rent it? 

A. I don't know, because before the actual 
filming of the picture I had closed my engagement 
with M. GL M. 

Q. You don't know of your own knowledge 
whether it went out? A. I do not. 

Q. The purpose for which you wanted this 
equipment was for filming, is that right? 

A. Yes. 

Q. It wasn't to be rolled from town to town? 

A. That is right. 

Q. And you could take as much time as you 
wanted to put it up? A. That is right. 

Q. And the wagons were going to be stationary 
all the time? A. That is right. 



266 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 

Q. So you didn't pull any of the wheels off and 
examine the axles? A. No. [444] 

Q. You made no examination at all, whatever? 

A. No. 

Q. You weren't interested in whether the wa- 
gons had brakes or not? 

A. I wasn't particularly interested, no. 

Q. What was your interest in the flat cars? 

A. The interest in the flat cars at that time was 
the fact that they had discussed — there was a se- 
quence in the picture showing the circus train in 
motion, passing from town to town at night, and it 
was supposed to be a night shot, and they were go- 
ing to build a miniature train, and they wanted 
scale drawings of flat cars and coaches and stock 
cars, so that they could portrary this train in mo- 
tion and have it a reasonable facsimile. 

Q. They weren't going to use any flat cars at 
all, then, for drawing purposes? A. No. 

Q. So you didn't have any occasion particu- 
larly to examine these cars as to their condition? 

A. I had examined them previously. 

Q. How long previously? 

A. I should say 60 days prior to the show going 
out. 

Q. Did you examine the cars — 

A. Thoroughly. 

Q. Did you examine those that went out with 
the Great American Circus? [445] 



Hagenbeck-Wallace Shotvs Co. 267 

(Testimony of Murray Pennock.) 

A. I must have examined those, because I ex- 
amined all of them. 

Q. Do you recall now car No. 65, which was a 
stock car? 

A. I can't identify the cars by number in my 
mind, no. 

Q. Did you have in mind at the time you exam- 
ined those cars and now, when you state that they 
were in good and usable condition, that car 65 had 
to have the air brakes cleaned, eight journal boxes re- 
packed, that one truck spring was broken, that they 
had to have repairs made and the car jacked, that 
three brake beam safety bar bolts and lock nuts % 
by 3 were worn out, that one brake bell crank was 
broken, that one bracket was broken, that two bolts 
and lock nuts % by 2% were worn out, that one 
brake chain bolt % by 2% was worn out, that one 
bell crank pin was worn out, and that two cotter 
keys were worn out, all on car 65? Did you know 
that when you made that examination? 

A. Not in detail, no, sir. 

Q. When you examined car 85, a flat car, did 
you know that one piece of train line pipe l 1 /^ by 
16 was rusted and needed replacing, that one coup- 
ling 114 had the threads broken, that two ends of 
pipe had to be threaded, that there were four con- 
nections that had to be repaired, that two "IT" pipe 
clamps V2 by 3 were worn out, that one pair SH 
wrought steel wheels had worn flanges on them, 
that two journal bearings, 9 inches, were worn [446] 



268 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 
out, that two dust guards 9 inches were worn out, 
that four journal box bolts and lock nuts 1% by 1.6 
were worn out, that one brake connecting cotter 
was worn out, that the wheels were badly worn, 
that eight journal boxes had to be repacked, that 
three journal bearings were worn and that the air 
brakes had to be cleaned'? Did you know that when 
you inspected car No. 85? 

A. I knew many of them, yes. None of those 
were major defects. 

Q. Did you hear Mr. Kettring, of the Santa 
Fe, testify? Did you hear him testify that some 
things violated the Interstate Commerce laws? 

A. Yes, sir. 

Q. Did you hear him state that they had to be 
repaired before they would carry them on their 
lines? A. I did. 

Q. When you examined car No. 87, did you 
know at that time that the air brakes had to be 
cleaned, that eight journals had to be repacked, that 
six journal bearings were worn out, that four safety 
bar bolts and lock nuts % by 2, were worn out? 
Did you know that when you examined car No. 87? 

A. Not in detail. 

Q. Did you know when you examined car No. 
80, a flat car, that one pair of SH wrought steel 
wheels had a worn flange, that two journal bearings 
9 inch were worn out, [447] that two dust guards 
9 inch were worn out, that four journal box bolts 
and lock nuts 1% by 16 were worn out, that one 



Hageribeck-Wallace Shotvs Co. 269 

(Testimony of Murray Pennock.) 
top rod was repaired because it was cut by the 
axle, that there were two connecting pins that had 
to be repaired, that one journal bearing 9 inch 
was w r orn out, that eight journal boxes had to be 
repacked, that the air brakes had to be cleaned, 
and that there had to be labor performed on those 
cars? Did you know that when you examined 
car 80? 

A. Again not in detail, no, sir. 

Q. When you were examining car 88, which 
was a flat car, did you know that two pair of SH 
wrought steel wheels had worn flanges, that four 
journal bearings 9 inch were worn out, that four 
dust guards were worn out, that eight journal box 
bolts and lock nuts were worn out, that there had 
to be labor performed on the wheels, that eight 
journal boxes had to be repacked, that two journal 
bearings were worn out, that two connecting cotter 
keys had to be replaced because they were worn 
out, and that the air brakes had to be cleaned? 
Did you know that when you examined car 88? 

A. Again not in detail, no, sir. 

Q. Did you know when you examined car 84, 
another flat car, that the air brakes had to be 
cleaned, that one train line nipple l 1 /^ by 6 had to 
be replaced because it was worn out, that one S'L 
angle cock had a leaky core, that one connection 
had to be repaired, that one U-clamp needed [448] 
repairing, that eight journal boxes had to be re- 
packed, that five journal bearings were worn out, 



270 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 
that one pair SH wrought steel wheels had worn 
flanges, that two journal bearings were worn out, 
that two dust guards were worn out, that four box 
bolts and lock nuts 1% by 16 were worn out, that 
labor was required on the wheels, that one side 
bearing bolt and lock nut % by 2 was worn out ? Did 
you know that when you examined car 84? 

A. I knew there were some flanges that nedeed 
attention and some journals that needed attention, 
yes. 

Q. And you considered those minor details'? 

A. Yes, sir. 

Q. Did you know when you examined car 82, a 
flat car, that there were eight journal boxes re- 
packed, that the air brakes had to be cleaned, and 
that one journal bearing 9 inch was worn out? Did 
you know that? 

A. Not all of it, no, sir. 

Q. Did you know on car No. 81, a flat car, that 
eight journal boxes had to be repacked, that the 
air brakes had to be cleaned, and that seven journal 
bearings 9 inch were worn out? Did you know that 
when you examined car 81? 

A. I knew some of it, but not all of it. 

Q. Did you know when you examined car 52, 
which was a passenger car, that there were three 
carrier iron bolts and lock nuts that were worn out, 
and three additional ones % by 5 were worn out, and 
three additional ones % by 4 were [449] worn out, 
and that twelve journal boxes had to be repacked, 



Hagenbeck-Wallace Shows Co. 271 

(Testimony of Murray Pennock.) 
and two journal bearings had to be replaced be- 
cause worn out, and that the air brakes needed 
cleaning? Did you know that when you examined 
passenger car No. 52 ? 

A. You can't know, can't tell whether an air 
brake needs cleaning until the car is connected onto 
a train. 

Q. Isn't that an element that you must take 
into consideration? 

A. No, because air brakes are automatically 
cleaned and must be cleaned every so often when 
the train is in operation. The date of the cleaning 
is stenciled on the brakes, and when the time comes 
for subsequent cleaning it has to be taken care of. 

Q. Did you examine the stenciling on the brakes % 

A. I saw stenciling on the brakes of some of 
the cars which stated that the air had been tested 
only a week or two prior to the Hagenback- Wallace 
Show coming in. It bore the date of the preceding 
September, 1938. 

Q. Were these some of the cars that w^ere with 
the Great American Circus? 

A. I don't know. 

Q. And with car 50, another passenger car, did 
you know that there was one pair of SH wheels 
that had worn flanges, that two journal bearings 
9 inch were worn out, that two dust guards were 
worn out, and that a full flange had to be restored 
to restore the wheels to service, that [450] there 
were wheels that required labor, and that twelve 



272 Fan chon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 
journal boxes had to be repacked, and two journal 
bearings 9 inch were worn out, and that one journal 
wedge had to be drop-forged, and that the air brakes 
had to be cleaned? Did you know that when you 
examined car 50, a passenger car? 

A. I think I knew everything that was faulty 
in connection with car 50, because I had talked 
to Claw r son about leasing that car myself. 

Q. And you thought it was in good, usable con- 
dition? A. Definitely, yes. 

Q. But you thought it was in usable shape for 
taking over to the studio? 

A. No. I was contemplating a tour of Canada 
with a negro choir, the Hall-Johnson Choir, and 
Mr. Clawson was making desperate efforts to lease 
me two Hagenback- Wallace cars. 

Q. And car No. 45, a passenger car, do you 
remember that? 

A. I know the No. 45 car, yes, sir. 

Q. Did you see anything wrong with that car? 

A. I don't recall specifically, no. The No. 50 
car was the car I was chiefly interested in. 

Q. Can you tell me whether you examined car 
No. 45 in making your inspection? 

A. I knew, as any circus man knows, of course, 
that there were things wrong with all of those cars. 

[451] 

Q. I am talking about car 45 now. 

A. I can't state specifically. 



Eagenbeck-Wallace Shows Co. 273 

(Testimony of Murray Pennock.) 

Q. You didn't know, then, that there was one 
wood end sill patch that was decayed on that, that 
had to be replaced? A. No. 

Q. Did you know that one vestibule diaphragm 
had to be straightened on the car because it was 
bent? A. I saw that, yes. 

Q. And that there were three carrier iron bolts 
and lock nuts that were worn and loose? Did you 
see that? A. I think so. 

Q. Did you know that twelve journal boxes had 
to be repacked as per Rule 66 ? 

A. The journal boxes on every railroad car 
have to be packed frequently. 

Q. And that one journal bearing 9 inch had 
to be replaced? 

A. Journal bearings have to be replaced fre- 
quently for any car in service. 

Q. Did you examine passenger car No. 46? 

A. Among the others, yes. 

Q. Do you remember anything about that? 

A. No, not particularly. 

Q. That was in good condition too, was it? 

A. I didn't say any of the lot were in good 
condition. [452] I said they were in usable con- 
dition. 

Q. Would you say the cars were not in good 
condition % 

A. They were in comparatively good condition, 
usable condition. To begin with, of course, they are 
wooden cars, and are quite serviceable for use in 



274 Fanchon & Marco, Inc., vs. 

(Testimony of Murray Pennock.) 
circus movements, where they would not be con- 
sidered good sleeping cars by the master mechanics 
of the Santa Fe or any other railroad, for use in 
passenger traffic, where train speeds are rated on a 
faster basis than the movements of a circus. The 
circus probably depended upon the equipment mov- 
ing under specific running orders. I was traffic 
manager of the Barnes Circus for seven years, and 
under running orders of 20 or 25 or 30 miles an 
hour those cars w^ere usable for service of that 
description, where they would not be considered 
usable by the Interstate Commerce Commission or 
a railroad man for passenger service work, like 
the Santa Fe Chief. 

Q. You say 20 or 25 miles an hour would be the 
maximum ? 

A. I didn't say the maximum. I said that would 
be the average speed at which the train was trans- 
ported. 

Mr. Schaefer: No further questions. [453] 



PATRICK GRAHAM, 

called as a witness in behalf of plaintiff in rebut- 
tal, being first duly sworn, testified as follows : 

Direct Examination 
Q. By Mr. Combs: You have been sworn? 
A. Yes, sir. 



Hagenbeck-Wallace Shows Co. 275 

(Testimony of Patrick Graham.) 

Q. Where is your place of residence? 

A. Pasadena, California. 

Q. Where? 

A. 985 North Marengo Avenue. 

Q. What is your occupation? 

A. Circus employee. 

Q. How long have you been engaged in that 
capacity? A. 19 years. 

Q. What character of work did you undertake 
during that 19 years? 

A. All the way from cook house punk up to 
head porter. 

Q. For what circuses? 

A. I started on the John Robinson Show; Sells- 
Floto; Hagenback- Wallace ; Sells Brothers; Al G. 
Barnes; McCullough Brothers. 

Q. Did you work for the Great American 
Circus? A. Yes, I did. 

Q. And that was in May of 1939? 

A. That is right. [454] 

Q. Who employed you? 

A. Mr. Eagles employed me. 

Q. And when ? A. Friday morning. 

Q. Before it went over to Inglewood? 

A. Before it went over to Inglewood. 

Q. Did you do anything when he employed you, 
or did you just wait around? 

A. No. I always worked 24 hours a day when 
I worked any. 

Q. And you went to Baldwin Park? 



276 Fanchon & Marco, Inc., vs. 

(Testimony of Patrick Graham.) 

A. Yes, sir. 

Q. What did you do when you got there? 

A. He told me to take one of his trucks and 
come over to Los Angeles and pick up men. 

Q. For what purpose ? A. For laborers. 

Q. Did you do so? A. I did so. 

Q. What were you to get? A. Men. 

Q. By Mr. Combs : How many did you get ? 

A. I picked up 25 on the first load. I lost two 
on the way over, and stopped and picked up two 
more at Baldwin Park, and I had 21 when I 
wound up. 

Q. Did you go for more men after that? [455] 

A. I made quite a few trips, yes, sir. 

Q. Were they experienced circus hands or 
green? 

Mr. Schaefer: I object to that as calling for a 
conclusion of the witness. 

Mr. Combs : I will withdraw it. 

Q. Is that all you did there at Baldwin Park? 

A. No. I had charge of the sleeping cars. 

Q. What was your official capacity? 

A. Head porter. 

Q. In that connection did you have occasion to 
observe the sleepers? 

A. I had four or five occasions to observe them. 

Q. Did you have charge of them? 

A. I had charge of them. 

Q. What did you do with relation to the sleepers 
before vou left Baldwin Park? 



Hagenbech-Wallace Shows Co. 277 

(Testimony of Patrick Graham.) 

A. You see, I have been a head porter before in 
other shows. That is my business. 

Mr. Schaefer: If the court please, — — 

A. And I carry my own crew of experienced 
porters. 

Mr. Schaefer: I want to enter an objection that 
it is not responsive. 

The Court : Just answer the question. 

Q. By Mr. Combs: You carry your own crew 
of porters? A. That is right. 

Q. Did you have that crew there? [456] 

A. I did. 

Q. Did you put them to work on these cars? 

A. I did. 

Q. What did you direct them to do ? 

A. I told them to clean the cars. 

The Court: What did they do? 

A. They cleaned the cars up. 

Q. By Mr. Combs: From end to end; is that 
right? A. From end to end. 

Q. With disinfectants? 

A. With disinfectants. 

Q. Relate exactly what you had them do in con- 
nection with cleaning the cars? 

A. As was customary, we took all the mattresses 
out and set them out in the sun and aired them, and 
if there was any spots on them that we could wash 
off, we washed them off. They was fairly new, 
bought brand new in 1938, in Indiana, out of Chi- 
cago, for Howard Yberry in Chicago. 



278 Fanchon & Marco, Inc., vs. 

(Testimony of Patrick Graham.) 

Q. Proceed. 

A. And there was not much work on cleaning 
the mattresses, so the men went back inside after 
they got the mattresses out, and proceeded to clean 
the cars, taking the wooden slats off of the beds. As 
you know, our beds do not have springs. Springs 
are bad for the kidneys, so we have wooden slats 
across the bunks. They took all the slats out and 
washed them with disinfectants and washed the 
cars down [457] with disinfectants, and made what- 
ever minor repairs was supposed to be made on the 
berths. 

Q. Was that all you did there ? 

A. I sent the sheets out that we had. 

Q. How many sheets did you have? 

A. We had 67 that was originally Hagenback- 
Wallace sheets, that was left there by the people 
that didn't want to take them. 

Q. What usually happens when a circus comes 
in to winter quarters with relation to sheets, pillow 
cases and blankets? 

Mr. Schaefer: I object to that. 

The Court : Sustained as to what usually happens. 

Q. By Mr. Combs: What is the custom? 

Mr. Schaefer: I object to the custom. 

The Court: Sustained. 

Q. By Mr. Combs : Then you needed more than 
67 sheets for this equipment? 

A. Yes, it is customary to have a few more than 
that. 



Hagenoech-Wallace Shows Co. 279 

(Testimony of Patrick Graham.) 

Q. With how many cars? 

A. They told me they was going to sleep 267 
people. 

Q. Did you contact or discuss the matter with 
Eagles or anyone else? 

A. I think they got a little mad at me. I dis- 
cussed it too many times with them. 

Q. You told them you needed sheets, pillow 
cases and [458] blankets'? A. Yes, sir. 

Q. And you finally got them? 

A. Yes, after I worried Mr. Daillard until he 
was about sick. 

Q. And you got them before you left Baldwin 
Park, didn't you? 

A. Yes. They brought them over about 7:00 
o'clock Monday evening. 

Q. And that was at Ingle wood? 

A. At Inglewood the beds was made up. 

Q. Were they dirty or clean? 

A. Fairly clean. I slept in them myself, and 
Mr. Eagles slept in them, and everybody else slept 
in them. There was no complaint at the time of 
the beds being dirty. 

Q. Later on you got some berth curtains? 

A. That is right. 

Q. When was that? A. At San Diego. 

Q. Did anything transpire with relation to berth 
curtains ? 

A. I had a little difficulty in getting berth cur- 
tains. 



280 Fanchon & Marco, Inc., vs. 

(Testimony of Patrick Graham.) 

Q. Did you ask Eagles for them? 

A. I asked Mr. Eagles for them, and he referred 
me to Mr. Daillard, because they made a ruling on 
the show that we couldn't purchase nothing with- 
out the purchasing agent's [459] order. 

Q. Who was the purchasing agent! 

A, Well, they had a couple of them up there. 
If you wanted one you couldn't find him, so we used 
the other one. 

Q. Which one did you 

A. I finally got Mr. Daillard to go down with 
me. 

Q. Did you have occasion to observe the condi- 
tion of the flat cars in this circus? 

A. Very much so. 

Q. What was their condition? 

A. I would say they was good. I have worked 
on worse. 

Q. By Mr. Combs: What was the condition of 
the runs? A. Very good. 

Q. What was the condition of the wagons? 

A. Good. 

Mr. Schaefer: I will object to that and move to 
strike the answer on the ground that there is no 
foundation laid for the answer to that question. 

The Court: The court will consider it, if it has 
any value. 

Q. By Mr. Combs: There was a toilet in one of 
these cars. What was the style of the toilets in these 
fears? [460] 



Hagenbeck-Wallace Shows Co. 281 

(Testimony of Patrick Graham.) 

A. We had two lavatories in each car, naturally, 
one at each end, for both sexes, the women on one 
end and the men on the other. The lavatories was in- 
spected in the Santa Fe shops over here in Los 
Angeles. 

Q. Did they pass them at that inspection ? 

Mr. Schaefer: Just a minute. I object to that on 
the ground that no foundation has been laid for it. 

The Court: Sustained. 

Q. By Mr. Combs: Did the Santa Fe direct you 
to do anything in the lavatories? 

A. No. 

Mr. Schaefer: I object to that on the ground — — 

The Court : Well, he has answered no, and the an- 
swer is against him. 

Mr. Schaefer: Well, I can't hear his answers, 
your Honor. 

The Court: Speak so that he can hear you. 

Q. By Mr. Combs: All right. What was the style 
of the lavatories there'? Were they flush or non- 
flush lavatories? 

A. They would flush. 

Q. The toilets in particular, how were they 
flushed? 

A. They had a ratchet on the side, and all you 
had to do was just push down and the toilets flushed. 

Q. Was that the case with all of these toilets? 

A. That is right. [461] 



282 Fanchon & Marco, Inc., vs. 

(Testimony of Patrick Graham.) 

Cross Examination 

Q. By Mr. Schaefer: Mr. Graham, how long 
have you served as porter with circuses? 

A. 12 years. 

Q. In the capacity of porter? 

A. In the capacity of porter. 

Q. And you were the one that was in charge of 
these sleepers ; is that right ? A. That is right. 

Q. What was the condition of the floors of the 
sleepers, the carpets? 

A. Mr. Carter, who was boss porter, had new 
carpet put in. 

Q. I am asking you the condition of these cars 
as they were in May, 1939 ? A. They was good. 

Q. Were there any holes in the carpets? 

A. No, sir. 

Q. Were you present this morning when Tiny 
Kline testified ? A. Yes, sir, I was. 

Q. Did you hear her testimony? 

A. Yes, I was here and I heard it. 

Q. You say there were no springs in these 
sleepers? [462] A. No, sir. 

Q. The mattresses were new ? 

A. They was new in the spring of 1938. 

Q. That was the year before? 

A. That is right. 

Q. Did you purchase them? 

A. Mr. Nick Carter purchased them. 

Q. Were you porter, when they were purchased, 
on these cars? 



Hagenbeck-Wallace Shotvs Co. 283 

(Testimony of Patrick Graham.) 

A. I was through Indiana when they was pur- 
chased. 

Q. And you saw these mattresses purchased in 
Indiana in 1938? A. Yes. 

Q. What kind of mattresses were they? 

A. They was cypress mattresses with a cotton 
filling. 

Q. Did they have any springs in them? 

A. No, sir. 

Q. Then there were no springs in the beds at 
all? A. No. 

Q. These 67 sheets, were they furnished? 

A. They was just there. 

Q. And they were taken? 

A. We used them, yes. 

Q. And you had 267 people to sleep? 

A. That is right, 

Q. You don't supply berth curtains every time a 
car [463] goes out, buy new ones ? 

A. It is according to who takes the show out. 

Q. Were there any berth curtains for these 
sleeping cars out at winter quarters ? A. No. 

Q. What happened to them? 

A. I would have to explain that. 

Q. Don't you ever have berth curtains for these 
cars? 

A. In certain circumstances, yes. There was a 
little difficulty on the Hagenback- Wallace Show 
when it closed, and the people took what they could 
carry, and the berth curtains was pretty good ma- 



284 Fanchon & Marco, Inc., vs. 

(Testimony of Patrick Graham.) 

terial, so they took them, and the blankets and 

sheets. 

Q. They didn't take the mattresses, did they? 

A. They are a little too bulky to carry. 

Q. You say the car was fairly clean. Just what 
character of cleanliness is fairly clean? Does that 
mean partly dirty? 

A. No, sir. You see, we always fumigate cars. 

Q. That is the law, isn't it? 

Mr. Combs: He doesn't know the law. 

Q. By Mr. Schaefer: Is that the law? 

The Court: Well, he is asking what he did. He is 
not asked about the law. 

Q. By Mr. Schaefer: Are you required to fumi- 
gate them ? 

A. To a certain extent, yes. [464] 

Q. They were fumigated ? 

A. No. We used another method. 

Q. You didn't fumigate? 

A. We didn't have time to fumigate. 

Q. When did you begin getting the cars ready? 

A. Friday morning at 7 :30. 

Q. And you left the winter quarters what time? 

A. Monday evening. 

Q. So you worked on them from Friday until 
Monday? A. Yes, sir. 

Q. You say you had no complaints about cleanli- 
ness. You were here this morning when the seven 
ladies from the Fanchonettes were here? 

A. My time was taken up entirely in 



Hagenbeck-W allace Shows Co. 285 

(Testimony of Patrick Graham.) 

Q. You did say the toilets were all in good, clean, 
working condition? 

A. The toilets were in good condition. 

Q. Did you say the water was flushing in all the 
toilets? A. It was. [465] 



CHARLES W. NELSON, 

recalled as a witness on behalf of plaintiff in re- 
buttal, testified further as follows : 

Direct Examination 
A. Yes. Mr. Clawson and myself and some other 
individual was standing in what was afterwards to 
become the backyard of the show, as we call it, and 
there was a truck being unloaded just in front of us 
by a couple of young fellows. They were unloading 
the calliope off of the tail-boards, and instead of 
letting it slide down straight, they had it at an 
angle, so it was at an angle, and it slipped and 
struck the ground and toppled over. [467] 

[Endorsed]: Eiled March 12, 1941. 



[Endorsed]: No. 9779. United States Circuit 
Court of Appeals for the Ninth Circuit. Fanchon 
& Marco, Inc., a Corporation, Appellant, vs. Hagen- 
beck- Wall ace Shows Company, a Corporation, Ap- 
pellee. Transcript of Record. Upon Appeal from 



286 Fanchon & Marco, Inc., vs. 

the District Court of the United States for the 
Southern District of California, Central Division. 
Filed March 29, 1941. 

PAUL P. O'BRIEN, 
Clerk of the United States Circuit Court of Appeals 
for the Ninth Circuit. 



In the United States Circuit Court of Appeals 
for the Ninth Circuit 

No. 9779 

FANCHON & MARCO, INC., a corporation, 

Appellant, 

vs. 

HAGENBECK- WALLACE SHOWS COMPANY, 

a corporation, 

Appellee. 

STATEMENT OF POINTS RELIED UPON 
AND DESIGNATION OF RECORD. 

Point I. 

The following paragraphs of the Findings of Fact 
are not supported by the evidence : 

II, III, IV, IX, X, XI, XIII and XVI. 

Point II. 

The District Court erred in drawing inferences 
from the non-production of evidence, in paragraphs 
IX and X of the Findings of Fact. 



Hagenoeck-Wallace Shows Co. 287 

Point III. 
That the judgment is not supported by the Find- 
ings of Fact and Conclusions of Law. 

Point IV. 

The District Court erred in the admission of testi- 
mony objected to by appellant. 

DESIGNATION OF PARTS OF RECORD NEC- 
ESSARY FOR CONSIDERATION OF THIS 

CASE. 

District Clerk's 

Index 

page 

Complaint 2 

Answer to Complaint 12 

Counterclaim 18 

Reply to Counterclaim 21 

Amended Counterclaim 23 

Reply to Amended Counterclaim 26 

Certificate of Pretrial hearing 31 

Pretrial Order 29 

Findings of Fact and Conclusions of Law 33 

Decision 33 

Judgment 42 

Notice of Appeal 44 

Order Extending Time to file record on 

appeal 49 

Bond on Appeal 45 

Designation of contents of record on ap- 
peal 47 



288 Fanchon & Marco, Inc., vs. 

District Clerk's 
Index 
page 
Amended Designation of Contents of 

Record on appeal 48 

This specification of points relied upon, 
and the designation of the record. 
That portion of the reporter's transcript of the 
testimony as follows: 





Page 


Line to Page 


Line Incl. 


Paul Eagles: 












18 


5 


31 


12 




36 


21 


37 


2 




42 


8 


42 


13 




55 


23 


56 


12 




64 


12 


64 


22 




68 


17 
19 


68 


20 
3 




72 


6 


73 


7 




82 


23 


83 


9 




83 


25 


84 


11 


Charles W. Nelson 


: 










95 


16 




21 




96 


7 




12 




413 


11 




18 


George Singleton: 












107 


5 




12 




110 


26 


111 


4 




111 


12 




20 




113 


17 




21 




116 


6 




24 



Hagenbeck-Wallace Shotvs Co. 289 

Page Line to Page Line Incl. 



Ralph J. Clawson 





133 


5 


134 


24 




136 


9 


137 


8 




145 


13 




22 




148 


9 




15 




155 


12 


156 


18 




159 


17 




26 


J. V. Austin: 












301 


17 


302 


8 




302 


17 


303 


14 




309 


11 




13 




309 


20 


310 


15 


Murray Pennock: 












385 


13 


388 


17 




389 


16 


399 


22 


Pat Graham: 












402 


7 


404 


8 




405 


16 




19 




406 


16 


407 


26 




408 


12 


409 


20 




411 


12 




20 


Marco Wolff: 












179 


15 


181 


14 




185 


6 




26 


Patty Hackett: 












223 


5 


227 


12 


Tiny Kline : 












233 


9 


234 


1 



290 Fanchon & Marco, Inc., vs. 

Page Line to Page Line Incl. 



Wayne Dailard: 












246 


7 




26 




247 


3 




26 




248 


7 


249 


15 




250 


15 


257 


7 




252 


18 




22 


Glenn Hall: 












265 


1 


266 


7 


R. V. Kettring: 












284 


13 


288 


12 


Ted Ducey: 












289 


20 


293 


17 




294 


23 


295 


26 


Jack W. Kramer: 












314 


8 


315 


15 




318 


23 


319 


4 


Charles E. 










Cunningham: 












325 


5 


327 


16 


Charles H. 










Priest, Jr.: 











Walter S. Ghiice: 



347 


11 


349 


2 


353 


4 




21 


355 


16 


356 


6 
12 


368-A 


9 


369 


17 


378 


12 


379 


6 


380 


8 




17 



Hagenbeck-Wallace Shows Co. 291 

Dated: March 28th, 1941. 

MacFARLANE, SCHAEFER, 
HAUN & MULFORD, 
JAMES H. ARTHUR and 
WILLIAM GAMBLE 
By HENRY SCHAEFER, JR., 

Attorneys for Appellant. 

Received copy of the within Statement this 28th 
day of March, 1941. 

COMBS & MURPHINE, 

Attorneys for Appellee. 

[Endorsed] : Filed Mar. 29, 1941. Paul P. O'Brien, 
Clerk. 



[Title of Circuit Court of Appeals and Cause.] 

APPELLEE'S DESIGNATION OF DOCU- 
MENTS, RECORDS AND PROCEEDINGS 
TO BE INCLUDED IN RECORD ON AP- 
PEAL, AND TO BE INCLUDED IN THE 
PRINTED TRANSCRIPT THEREOF. 

Comes now the Appellee, Hagenbeck-Wallace 
Shows Company, a corporation, within ten days of 
the date of the service upon it of Appellant Fan- 
chon & Marco, Inc's State of Points Relied Upon 
and Designation of Record, and designates the fol- 
lowing documents, records and proceedings, and 
portions of the record which it believes necessary to 
a proper determination of the above entitled case 



292 Fanchon & Marco, Inc., vs. 

on appeal, including portions of the reporter's 
transcript of testimony received during the trial. 

I. 

Appellee's Exhibits A-l and A-2. 

II. 

Appellant's Exhibits 1 to 17 inclusive. 

III. 

The following portions of the reporter's tran- 
script of the testimony and proceedings before the 
trial court, as set forth by line and page, as follows: 

1. Page 2, line 19, to page 9, line 15 inclusive, 
being certain preliminary statements and stipu- 
lations, 

2. Page 10, line 8 to page 18, line 4; page 31, 
line 13 to page 36, line 20 ; page 37, line 3 to page 42, 
line 7; page 42, line 14 to page 50, line 8, being all 
of the remainder of the direct examination of Paul 
Eagles, beyond that requested by Appellant herein. 

3. Page 56, line 13 to page 56, line 15; page 64, 
line 23 to page 67, line 3 ; page 70, line 6 to page 72, 
line 7; page 85, line 8 to page 89, line 14; page 91, 
line 12 to page 92, line 19, being portions of the cross 
and redirect examination of Paul Eagles. 

4. Page 93, line 1 to page 95, line 15; page 95, 
line 22 to page 96 , line 6 ; page 96, line 13 to page 98, 
line 26, being all of the remaining examination of 
Charles W. Nelson not requested by Appellant. 

5. Page 101, line 1 to page 107, line 4 ; page 107, 
line 13 to page 110, line 26 ; page 111, lines 5 to 11 ; 



Hagenbeck-Wallace Shoivs Co. 293 

page 111, line 21 to page 113, line 16; page 113, 
line 23 to page 116, line 5 ; page 116, line 25 to page 
117, line 24, being all of the remaining examination 
of George Singleton not requested by Appellant. 

6. Page 125, line 1 to page 133, line 4 ; page 134, 
line 25 to page 136, line 8; page 137, line 9 to page 
145, line 12; page 145, line 23 to page 148, line 8; 
page 148, line 16 to page 149, line 4 ; page 158, line 3 
to page 159, line 16; page 160, line 1 to page 161, 
line 14, being portions of the testimony of Ralph J. 
Clawson not requested by Appellant herein. 

7. Page 299, line 1 to page 301, line 15 ; page 302, 
line 9 to page 302, line 16 ; page 303, line 15 to page 
309, line 10, being portions of the testimony of J. V, 
Austin not requested by Appellant herein. 

8. Page 312, line 1 to page 314, line 7 ; page 317, 
line 3 to page 318, line 22, being portions of the 
testimony of Jack W. Kramer not requested by Ap- 
pellant herein. 

9. Page 327, line 19 to page 327, line 26, being 
portions of the testimony of Charles E. Cunningham 
not requested by Appellant herein. 

10. Page 350, line 14 to page 353, line 3; page 
354, line 11 to page 355, line 6, being portions of the 
testimony of Charles H. Priest, Jr. not requested by 
Appellant herein. 

11. Pages 384, line 4 to page 388, line 7; page 
388, line 18 to page 389, line 11, being portions of 
the testimony of Murray Pennock not requested by 
Appellant herein. 



294 Fanchon & Marco, Inc., vs. 

12. Page 400, line 1 to page 402, line 6 ; page 404, 
line 9 to page 405, line 15 ; page 405, line 20 to page 
406, line 11; page 408, line 4 to page 408, line 11; 
page 409, line 21 to page 411, line 11, being portions 
of the testimony of Pat Graham not requested by 
Appellant herein. 

13. Page 413, line 6 to page 413, line 10, being 
portions of the testimony of Charles W. Nelson not 
requested by Appellant herein. 

14. Page 212, line 14 to page 212, line 25, being 
portions of testimony of Marco Wolff. 

Dated this 1st day of April, 1941. 

COMBS & MURPHINE 
By LEE COMBS, 

Attorneys for Appellee. 

Received copy of the within Designation this 1st 
day of April, 1941. 

MacFARLANE, SCHAEFER, 
HAUN & MULFORD, 
By W. F. 

Attorneys for Appellant. 

[Endorsed]': Filed Apr. 2, 1941. Paul P. O'Brien, 
Clerk. 



[Title of Circuit Court of Appeals and Cause.] 

STIPULATION 

Whereas, the Appellee has designated for inclu- 
sion in the printed record certain exhibits being Ap- 
pellant's exhibits 1 to 13, and 



Hagenbeck-Wallace Shotvs Co. 295 

Whereas, it is agreed upon by the Appellant and 
by the Appellee, through their respective counsel 
undersigned, that for the consideration of this case 
it is unnecessary that all of said exhibits be printed 
in the record. 

Now, Therefore, It Is Hereby Stipulated, that 
Appellant's Exhibit 1 is to be reproduced in its en- 
tirety in the printed record and that Exhibits 2 to 
13 inclusive may be omitted except a notation as to 
the parties thereto and the date of execution. 

Dated: April 9, 1941. 

COMBS & MURPHINE 
By LEE COMBS 

Attorneys for Appellee 
MacFARLANE, SCHAEFER, 
HAUN & MULFORD, 
JAMES H. ARTHUR and 
WILLIAM GAMBLE 
By HENRY SCHAEFER, JR., 
Attorneys for Appellant. 

Good cause appearing therefor, 
It Is Hereby Ordered, that the printed record 
may be made to conform to the above stipulation. 

Dated: April 14,1941. 

CURTIS D. WILBUR, 

Judge of the Circuit Court of 
Appeals. 

[Endorsed]: Filed April 14, 1941. Paul P. 
O'Brien, Clerk. 



IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



Fanchon & Marco, Inc., a corporation, 



Appellant, 



vs. 



Hagenbeck-Wallace Shows Company, a corporation, 

Appellee. 



APPELLANT'S OPENING BRIEF. 



Macfarlane, Schaefer, Haun & Mulford, 
James H. Arthur and 
William Gamble, 

1150 Subway Terminal Building, Los Angeles, 
^\ Attorneys for Appellant. 



— 



Parker & Baird Company, Law Printers, Los Angeles. 






. ;•• ='«4'i ;:e^m'. ^. :' : ■■■■■■„■■ ■ , -,^ . ^>m&^J&$ 









M^w : . 



TOPICAL INDEX. 



PAGE 



Statement of pleadings and facts disclosing basis of jurisdiction 1 

Statement of case 5 

Specifications of Error 7 

Argument 13 

Point I. The court erred in finding that there had been a 
waiver by the appellant of the terms of the contract which 
provided that the equipment when delivered in Inglewood 
would be in good condition and ready for use 13 

Point II. The court erred in concluding that a presumption 
arose because the appellant failed to produce certain physi- 
cal evidence, towit, some rope which was not in appellant's 
possesion but was in the possession of appellee, and in mak- 
ing a finding upon such erroneous presumption 23 

Point III. The finding of fact that the property delivered by 
appellee to appellant at Inglewood was at the time of deliv- 
ery in good condition and ready for use, is not supported 
by the evidence 26 

Point IV. The court erred in finding that the appellant com- 
pany engaged in the show business was familiar with the 
circus business and knew about ropes, and that it must have 
known how long the rope would likely continue in use 42 

Point V. The court erred in finding that there was no dry 
rot in the rope and that dry rot could not be detected by 
a person looking at it, and that the witnesses had no special 
knowledge 44 



PAGE 

Point VI. The court erred in rinding that there was no evi- 
dence that the wagons had been greased or oiled and draw- 
ing a conclusion therefrom that they had not been greased or 
oiled, and at the same time finding that the appellant em- 
ployed a staff of efficient showmen as heads of the several 
departments 50 

Point VII. The court erred in concluding that the appellant 
accepted the property "without discovering any fault of any 
sort or fashion", and then immediately concludes further that 
the appellant "assumed to make reconditioning for such 
needed repairs as were apparent" 51 

Point VIII. The court erred in concluding that appellant 
closed the circus because threatened with a closed shop by 
labor unions 53 

Point IX. Opinion evidence. The admission of opinion testi- 
mony must be preceded by a proper foundation showing that 
the witness is qualified as an expert by reason of his supe- 
rior knowledge and it must be shown that he has had an 
opportunity for observation in order to draw his conclusion 
therefrom 55 

Point X. Opinion evidence 57 

Points XI and XII. Opinion evidence 58 

Point XIII. The judgment is not supported by the findings 
in that there is no finding to sustain the allegation of the 
complaint that the appellee made an effort to mitigate dam- 
ages as alleged in its complaint 59 

Conclusion 60 



TABLE OF AUTHORITIES CITED. 

Cases. page 

Craig v. White, 187 Cal. 489 19 

Cussen v. Southern Calif. Savings Bank, 133 Cal. 534 60 

Dieterle v. Bekin, 143 Cal. 683 60 

Dobbie v. Pac. Gas & Elec. Co., 95 Cal. App. 781 58 

Hiner v. Olson, 23 Cal. App. (2d) 227 24 

Howland v. Oakland Cons. St. Ry. Co., 110 Cal. 513 58 

Kadow v. City of Los Angeles, 31 Cal. App. (2d) 324 21 

Kinsey v. Pac. Mut., 178 Cal. 153 58 

Lemm v. Stillwater Land & Cattle Co., 217 Cal. 474 16 

Linnard v. Sonnenschein, 94 Cal. App. 729 22 

Moore, Estate of, 180 Cal. 570 24 

Ogburn v. Travelers Insurance Co., 207 Cal. 52 17 

Tieman v. Red Top Cab Co., 117 Cal. App. 40 25 

U-Drive etc. v. System Auto Parks, 28 Cal. App. (2d) 782 60 

Vallejo & Northern Ry. Co. v. Reed Orchard Company, 169 

Cal. 545 56 

Wilson v. Crown Transfer etc. Co., 201 Cal. 701 59 

Statutes. 

Civil Code, Sec. 1955 15, 60 

Code of Civil Procedure, Sec. 1963 (5) 23 

Code of Civil Procedure, Sec. 1870, Subd. 9 57 

Rules of Civil Procedure for the District Courts of the United 

States, Rule 75 4 

28 United States Code, Annotated, Sec. 41 (1) 3 

28 United States Code, Annotated, Sec. 225, para, (a) 3 

28 United States Code, Annotated, Sec. 230 4 

Textbooks. 
10 California Jurisprudence, Sec. 86, p. 779 24 



No. 9779. 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



Fanchon & Marco, Inc., a corporation, 

Appellant, 



vs. 



Hagenbeck-Wallace Shows Company, a corporation, 

Appellee. 



APPELLANT'S OPENING BRIEF. 



Statement of Pleadings and Facts Disclosing Basis of 

Jurisdiction. 

The appellant, Fanchon & Marco, Inc., is a corporation 
organized and existing under and by virtue of the laws of 
the State of California. 

The appellee, Hagenbeck-Wallace Shows Company, is 
a corporation organized and existing under and by virtue 
of the laws of the State of Indiana. 

The appeal is from a judgment in favor of the appellee 
in the sum of fifteen thousand six and 07/100 dollars 
($15,006.07), general damages and costs rendered upon 
a judgment by the Court. 



— 2— 

The complaint alleges the making and execution of a 
written contract dated May 22, 1939, wherein the appellee 
leased to appellant specified circus equipment for five 
weeks under certain terms and conditions, and wherein the 
appellant agreed to pay as rent therefor the sum of two 
thousand five hundred dollars ($2,500.00) per week. It is 
further alleged in the complaint, that the appellee deliv- 
ered said equipment in compliance with the terms of the 
contract, in good condition, ready for use, and that appel- 
lee has performed all the other covenants in said contract 
to be performed by appellee, and that the appellant has 
failed and refused to pay the rental of two thousand five 
hundred dollars ($2,500.00) a week for the period, and 
that the whole amount together with interest thereon is 
due and owing from appellant to appellee. [Pr. Tr. pp. 
2-14.] 

It is further alleged, that on or about May 31, 1939, 
the appellant returned all of said circus equipment to the 
appellee, and that during the unexpired term of said rental 
period, namely, a period of four weeks, the appellee en- 
deavored to, and made every effort to, rent said circus 
equipment, but was unable to do so. That as a conse- 
quence of appellant's alleged breach and return of said 
equipment, the appeliee was compelled to feed the animals 
to its damage in the amount of one thousand six hundred 
dollars ($1,600.00). 

The Answer of appellant admits the execution of the 
contract, but denies that the appellee has performed all 
the conditions and covenants on its part to be performed. 



— 3— 

That as an affirmative defense, the appellant sets up the 
fact that on or about the 31st day of May, 1939, the 
appellant returned all of said equipment to the possession 
of the appellee, and served the appellee with a Notice of 
Rescission. [Pr. Tr. pp. 14-26.] There is also included 
in the answer, a counterclaim for appellant's damages in 
the amount of $50,000.00. 

That the action was commenced in the United States 
District Court of the Southern District of California, 
Central Division, pursuant to 28 U. S. C. A., Section 
41 (1). The statutory provision relied upon to sustain 
the jurisdiction of the District Court is 28 U. S. C. A., 
Section 41 (1). The statutory provision relied upon to 
give this Honorable Court jurisdiction on appeal to review 
a judgment of the District Court is 28 U. S. C. A., Sec- 
tion 225, paragraph (a). 

The pleadings necessary to sustain the existence of 
jurisdiction in the District Court are the Complaint [Pr. 
Tr. p. 2], the Answer [Pr. Tr. p. 14], Reply to Counter- 
claim [Pr. Tr. p. 26], Amended Counterclaim [Pr. Tr. 
p. 28], Reply to Amended Counterclaim. [Pr. Tr. p. 32.] 

Judgment was entered in the District Court on Decem- 
ber 3rd, 1940. [Pr. Tr. p. 46.] Notice of Appeal was 
filed by appellant on the 16th day of January, 1941. [Pr. 
Tr. p. 48.] Bond on appeal in the sum of $20,000.00 cov- 
ering both judgment and costs was filed by appellant on 
January 16th, 1941. [Pr. Tr. p. 49.] 

The typewritten transcript of record in the above en- 
titled cause was filed and docketed in this Honorable Court 



—4— 

on the 29th day of March, 1941 [Pr. Tr. p. 285], which 
was within the time allowed for the docketing of said 
transcript, the time therefor having been extended by the 
District Court in compliance with provisions of Rule 73 
of Rules of Civil Procedure for the District Courts of the 
United States. [Pr. Tr. p. 55.] The typewritten tran- 
script of record was prepared pursuant to a Designation 
of Record on Appeal and Amended Designation of Record 
on Appeal in accordance with Rule 75 of the Rules of 
Civil Procedure for the District Courts of the United 
States, the Designation having been filed on the 12th day 
of March, 1941 [Pr. Tr. p. 52], Amended Designation 
having been filed on the 13th day of March 1941. [Pr. 
Tr. p. 54.] 

Pursuant to Rule 19, subdivision 6, of the Rules of this 
Honorable Court, a statement of the parts of the record 
necessary for the consideration of the case, and a state- 
ment of points relied upon was filed on the 2nd day of 
April, 1941. [Pr. Tr. p. 286.] 

The transcript of record was filed in this Honorable 
Court on the 29th day of March, 1941, and all proceed- 
ings having been taken within the time as provided by the 
rules of Court, and the provisions of the Federal Code, 
28 U. S. C. A., Section 230, this case is now before this 
Honorable Court. 



— 5— 

Statement of Case. 

The appellee in this case is a corporation engaged in the 
business of conducting and maintaining circuses and leas- 
ing circus equipment. For some time prior to May 23, 
1939, this circus equipment was stored at appellee's winter 
quarters in Baldwin Park, California. [Pr. Tr. p. 66.] 

Approximately three or four weeks before the execu- 
tion of the contract between the appellee and appellant, 
the agent of the appellee, Ralph J. Clawson, solicited the 
appellant with the idea of renting to appellant the circus 
equipment owned by the appellee; that extended negotia- 
tions were had regarding the rental of said equipment 
which culminated in the execution of a contract, attached 
as "Exhibit A" to appellee's complaint [Pr. Tr. p. 8] and 
which was stipulated to be the contract executed by the 
parties. [Pr. Tr. p. 36.] 

That at the pretrial hearing, the issues in said cause 
were limited to the question of whether the equipment was 
delivered in accordance with the provisions of the con- 
tract, namely, whether the equipment was in good condi- 
tion and ready for use when delivered by the appellee to 
the appellant at Inglewood, California. The appellant con- 
tends that the appellee failed to deliver all of the specified 
equipment, and that the equipment delivered was not in 
good condition and ready for use as specified in the con- 
tract; that after having used said equipment for a period 
of one week, appellant found it so completely unsatisfac- 
tory that it was impossible for appellant to pursue the 



business of putting on and staging a circus. [Pr. Tr. 
p. 36.] 

That on the 31st day of May, 1939, the appellant re- 
turned all of said equipment to the appellee at its winter 
quarters at Baldwin Park and thereupon served the appel- 
lee with a Notice of Rescission of said contract. [Pr. Tr. 
p. 25.] 

The appellee introduced evidence attempting to prove 
that the equipment as delivered was in compliance with 
the terms of the contract, namely, in good condition and 
ready for use, but the evidence introduced is so inade- 
quate that it fails to establish any fact upon which a find- 
ing by the Court can be sustained. 

Appellee's complaint alleged on the contract and set 
forth two additional causes of action. It was agreed at 
the pretrial hearing that the second and third causes of 
action were predicated upon the first, and it was ordered 
by the Court that the second and third causes of action 
be dismissed. The trial, therefore, proceeded on the first 
cause of action only. 

Appellee in paragraph IV of its complaint [Pr. Tr. p. 3] 
made as a part of its case the allegation that after the 
return of the equipment to the appellee, the appellee made 
every endeavor during the remaining portion of the rental 
term to let the property but was unable so to do. No 
evidence whatever was offered to sustain this allegation. 



Specifications of Error. 

I. 

The Court erred in finding that there had been a waiver 
by the appellant of the terms of the contract which pro- 
vided that the equipment when delivered in Inglewood 
would be in good condition and ready for use. 

II. 

The Court erred in concluding that a presumption arose 
because the appellant failed to produce certain physical 
evidence, to-wit, some rope which was not in appellant's 
possession but was in the possession of appellee, and in 
making a finding upon such erroneous presumption. 

III. 

The finding of fact that the property delivered by appel- 
lee to appellant at Inglewood was at the time of delivery 
in good condition and ready for use, is not supported by 
the evidence. 

IV. 

The Court erred in finding that the appellant company 
engaged in the show business was familiar with the circus 
business and knew about ropes, and that it must have 
known how long the rope would likely continue in use. 
[Findings, Pr. Tr. p. 40.] 

V. 

The Court erred in finding that there was no dry rot 
in the rope and that dry rot could not be detected by a 
person looking at it, and that the witnesses had no special 
knowledge. [Findings, Pr. Tr. p. 43,] 



VI. 

The Court erred in finding that there was no evidence 
that the wagons had been greased or oiled and drawing a 
conclusion therefrom that they had not been greased or 
oiled, and at the same time finding that the appellant 
employed a staff of efficient showmen as heads of the 
several departments. [Findings, Pr. Tr. p. 44.] 

VII. 

The Court erred in concluding that the appellant ac- 
cepted the property " without discovering any fault of 
any sort or fashion," and then immediately concludes 
further that the appellant "assumed to make recondition- 
ing for such needed repairs as were apparent." 

VIII. 

The Court erred in concluding that appellant closed the 
circus because threatened with a closed shop by labor 
unions. 

IX. 

The Court erred in admitting the testimony, over ob- 
jection of appellant, as follows: 

"Q. What did you do when you arrived at Bald- 
win Park with relation to examining and making 
such repairs as were necessary to the wagons? A. 
Well, I believe that first day I hired a mechanic who 
was on the Barnes Show, Forbes — I am sure it was 
the first day — and another man who handled the 
tractors, and I told them to look over the wagons 
that we were selecting, one of them to look them 



over for the rings, to let them up and down off the 
train to see if they were all sound, and, if they 
were not, to get them repaired. 

Q. Under your direction and supervision? A. 
That is so. 

Q. Did he report back to you in that connection? 
A. Yes. 

Q. What did he report to you? A. He reported 
to me that the wagons were usable. 

Q. And were there any repairs that were made 
on those wagons? A. Yes. I told him to make any 
necessary repairs on the wagons. 

Q. Were they in such condition as used circus 
wagons would normally be in, at such a time? A. 
Yes. 

Mr. Schaefer: I object to that as calling for the 
conclusion of the witness. 

The Court: I think, after what he has stated, his 
conclusion is proper. 

Q. By Mr. Combs: And were they, in your 
opinion, in good condition and ready for use in the 
business of the production of a circus at that time? 
I will withdraw that. At the time of May 23rd, when 
delivery was made at Inglewood? A. Well, I had 
used them and we hauled the show out with them. 

Mr. Schaefer: I move to strike that answer as 
not responsive, Your Honor. 

Q. By Mr. Combs: In your opinion. Just an- 
swer the question. 



—10— 

The Court: Answer the question as propounded. 

Q. By Mr. Combs: In your opinion. A. They 
were in usable condition, yes." [Pr. Tr. pp. 71-72.] 

X. 

The Court erred in admitting the testimony, over ob- 
jection of appellant, as follows: 

"Q. Did anything occur at Santa Ana with rela- 
tion to the equipment that was out of the ordinary? 
A. Yes. We had a long hill there, and I think the 
pole wagon went over the side of the run. 

Q. What was the occasion for that? A. I wasn't 
there. All I know is the report that it was so. 

Q. Who reported it to you? A. The trainmaster 
— or Pat Graham came down and told me it was 
reported to him by the trainmaster. 

Q. Are you able to say whether or not it went 
over the side of the run because of some faulty con- 
struction of either the wagon or the run ? A. I don't 
know. 

Q. Have you ever had opportunity to observe a 
wagon slip off a run before, in the conduct of a cir- 
cus ? A. Yes. 

Q. In fact, that is usually an accident that occurs 
as a result of wrong turning? A. It could be, if he 
didn't handle the pole of the wagon properly coming 
across the platform. 



—11— 

Mr. Schaefer: I move to strike that out, Your 
Honor. He wasn't there, and he has given what 
might be a reason. 

The Court: He is giving his ideas as a man fa- 
miliar with this sort of business, and I think it is 
proper. The court will only give it such weight as 
it ought to have, anyway." [Pr. Tr. p. 88.] 

XI. 

The Court erred in admitting the testimony, over ob- 
jection of appellant, as follows: 

"O. Did you go out to Baldwin Park before the 
opening day of the circus? A. I did. 

Q. Did you examine any of the equipment out 
there at that time?" [Pr. Tr. pp. 88-89.] 

"Mr. Schaefer: Just a minute. I object to that 
unless it is the equipment used by the Great American 
Circus. 

The Court: It should be limited. 

Mr. Combs: It should be. I so qualify my 
question. 

A. Only to the extent that the various wagons 
that were to be used were identified by Mr. Clawson 
as 'this' and 'that' and 'this/ and so forth. 

Q. By Mr. Combs: Can you state what your 
observation of their condition was at that time? A. 
My observations of their conditions were that they 
were usable. 

Q. Were they in good condition, suitable for use 
for the production of a circus? 



—12— 

Mr. Schaefer: I object to that as calling for the 
conclusion of the witness, without proper foundation 
being laid. 

The Court: Let us find out what he knows about 
it. Do you know anything more about them? A. I 
can only say that they looked to me to be usable." 
[Pr. Tr. p. 226, line 16, to p. 227, line 10.] 

XII. 

The Court erred in admitting the testimony, over ob- 
jection of appellant, as follows: 

"Q. Did you have occasion to observe the condi- 
tion of the flat cars in this circus? A. Very much so. 

Q. What was their condition? A. I would say 
they was good. I have worked on worse. 

Q. By Mr. Combs: What was the condition of 
the runs? A. Very good. 

Q. What was the condition of the wagons? A. 
Good. 

Mr. Schaefer: I will object to that and move to 
strike the answer on the ground that there is no 
foundation laid for the answer to that question. 

The Court: The court will consider it, if it has 
any value." [Pr. Tr. p. 280, lines 13-27.] 

XIII. 

The judgment is not supported by the findings in that 
there is no finding to sustain the allegation of the com- 
plaint that the appellee made an effort to mitigate dam- 
ages as alleged in its complaint. 



—13— 
ARGUMENT. 

POINT I. 

The Court Erred in Finding That There Had Been a 
Waiver by the Appellant of the Terms of the Con- 
tract Which Provided That the Equipment When 
Delivered in Inglewood Would Be in Good Condi- 
tion and Ready for Use. 

The Court found that 

"When the defendant accepted the property, after 
examination and after exposition of the property to 
him, without discovering any fault of any sort or 
fashion, and assumed to make reconditioning for such 
needed repairs as were apparent, and charged it to 
the plaintiff's account with the plaintiff's consent, he 
waived such reconditioning as is shown to have been 
necessary and to have been made,". 

The evidence not only does not sustain this finding but 
on the contrary it is appellant's contention that there is 
no substantial evidence to support this conclusion. 

Under the terms of the contract, the appellee was re- 
quired at its own expense to deliver all of the leased circus 
equipment "in good condition and ready for use, to the 
lessee (appellant) at Inglewood, California, by May 23, 
1939". [Pr. Tr. p. 9.] This sets forth the obligation of 
the appellee, and a determination must be made whether 
or not this obligation was fulfilled by the appellee. An 
examination of the evidence indicates that the only sub- 
stantial proof offered by appellee is that the equipment was 
ready for use, but there is no proof of that part of the 
covenant which requires that the equipment be in good 
condition. 



—14— 

The appellee could not fulfill its obligation in this con- 
nection by merely delivering the equipment ready for use 
at Inglewood without having it in good condition for the 
period of the contract. This covenant of the contract 
must be read in connection with the preceding covenant 
which provides that the lease was for five weeks with an 
option for renewal for a period which, if exercised, would 
have made a total rental period of twelve weeks. Good 
condition could only, therefore, mean in such condition 
that the appellant could reasonably anticipate the use of 
the equipment for the term provided. 

As a further preliminary, and aid in construing the 
lease contract between the parties, it must be called to the 
Court's attention that as the lease was originally pre- 
pared the appellee had in mind that the appellant was to 
acknowledge that it had examined the property, and that 
the appellee was to make no representation as to its con- 
dition or fitness for the use thereof intended by the 
lessee. 

"8. The Lessee has examined the said property 
and the Lessor makes no representation as to its- een- 
dition of fitness 4e? the «se thereof intended by- the 
Lcgscc. (WPD JR)" [p r . Tr. p. 11.] 

But the appellant did not agree to such a condition and 
accordingly struck the same from the contract. While 
paragraph 8 was deleted and became of no effect, yet it is 
of tremendous aid in construing the intention of the par- 
ties. Under the circumstances we submit that the contract 
must be considered in the light that the appellant had not 
examined the leased property, and that such representa- 
tions as to fitness as would ordinarily be implied for the 
use to which the equipment was intended to be used, must 
be implied. 



—15— 

Section 1955 of the California Civil Code, provides as 
follows : 

"One who lets personal property must deliver it to 
the hirer, secure his quiet enjoyment thereof against 
all lawful claimants, put it into a condition fit for the 
purpose for which he lets it, and repair all deteriora- 
tions thereof not occasioned by the fault of the hirer 
and not the natural result of its use. ,, 

Therefore, we reiterate that the appellee was required 
to prove that all of the equipment provided for in para- 
graph (1) of the contract [Pr. Tr. p. 8] was delivered at 
Inglewood in good condition and ready for use. The ap- 
pellant had not examined the property and did not release 
the appellee from any representation that might have been 
made as to condition or fitness, and the appellee knew that 
the equipment was to be used for five weeks and perhaps 
twelve. 

The lower Court's approach to this problem apparently 
was that the appellant, because it was in the show busi- 
ness, had circus knowledge and an intimate knowledge of 
ropes [Pr. Tr. p. 40], and that appellant had sent out 
agents to examine the property at Baldwin Park and to 
pass on it there. 

The Court found as a fact that there had been a waiver 
by the appellant of the terms requiring the equipment to 
be in good condition and ready for use. [Pr. Tr. p. 45.] 

It is evident that the parties considered the matter of 
waiver and expressly eliminated such a provision. In or- 
der to interpret the contract and ascertain the effect of 
the language it is necessary to consider it as a whole. 
Furthermore, in determining whether there has been a 
waiver of any term of the contract, it is of utmost im- 



—16— 

portance to have a complete understanding of the facts 
which operated upon the minds of the parties in executing 
that particular instrument. 

It is said in Lemm v. Stillwater Land & Cattle Co., 217 
Cal. 474, at 480, 

"A court must look at the contract as a whole and 
give to each particular clause thereof the modification 
or limitation or qualification which it is evident from 
the other parts of the contract the parties intended. 
(See 1641, Civ. Code; Ogburn v. Travelers Ins. Co., 
207 Cal. 50, 53 (276 Pac. 1004) ; Stockton Sav. & 
L. Soc. v. Purvis, 112 Cal. 236, 238 (44 Pac. 561, 53 
Am. St. Rep. 210); 6 R. C. L. p. 834 et seq.) In 
the interpretation of contracts the duty of the court 
is to ascertain the intent of the parties. Although 
the language of the contract must govern its inter- 
pretation (Civ. Code sees. 1638, 1639), nevertheless 
the meaning is to be obtained from the entire con- 
tract and not from any one or more isolated portions 
thereof. (Hunt v. United Bank & Trust Co., 210 
Cal. 108, 115 (291 Pac. 184); Kennedy v. Lee, 147 
Cal. 596, 601 (82 Pac. 257) ; Eastman v. Piper, 68 
Cal. App. 554 (229 Pac. 1002; 13 C. J. p. 525).) 
To assist it in the performance of this duty the court 
may look to the circumstances surrounding the par- 
ties at the time they contracted (Civ. Code, sec. 
1647; Ogburn v. Travelers Ins. Co., supra, at p. 52; 
Smith v. Carlston, 205 Cal. 541, 550 (271 Pac. 
1091); Henika v. Lange, 55 Cal. App. 336, 339 (203 
Pac. 798)), including the object, nature and subject 
matter of the agreement (6 R. C. L., pp. 836, 837, 
Eastman v. Piper, supra, at p. 565 ; Canal Co. v. Hill, 
82 U. S. 94, 100, 101 (21 L. Ed. 64)), and the pre- 
liminary negotiations between the parties (6 R. C. 
L., p. 839), and thus place itself in the same situa- 



—17— 

tion in which the parties found themselves at the 
time of contracting. (Code Civ. Proc, sec. 1860; 
6 R. C. L., p. 849; Jersey Island Dredging Co. v. 
Whitney, 149 Cal. 269, 273 (86 Pac. 509, 691); 
Blaeholder v. Guthrie, 17 Cal. App. 297, 300 (119 
Pac. 524).)" 

The intention of the parties can be clearly ascertained 
from the fact that the provision providing that the appel- 
lant waive his right to demand that the equipment be de- 
livered in good condition was stricken from the terms of 
the contract. This immediately impels us to the contrary 
conclusion in regard to waiver of the expressed terms of 
the contract. If there has arisen such a waiver it must 
be demonstrated by other facts and circumstances which 
give rise to a presumption of more force than the intention 
expressed by these actions in revising the terms of the 
contract. 

In Ogburn v. Travelers Insurance Co., 207 Cal. 52, the 
Court in the following language states that it is of 
primary importance to ascertain the intentions of the par- 
ties and to carry them out by enforcing the terms of a 
contract. 

"In the interpretation of a written instrument the 
primary object is to ascertain and carry out the in- 
tention of the parties thereto. (Burnett v. Piercy, 
149 Cal. 178, 189 (86 Pac. 603); First Nat. Bank 
v. Bowers, 141 Cal. 253, 262 (74 Pac. 856).) This 
fundamental rule finds recognition in section 1636 
of our Civil Code, wherein it is provided that 'A con- 
tract must be so interpreted as to give effect to the 
mutual intention of the parties as it existed at the 
time of contracting, so far as the same is ascertain- 
able and lawful.' As to the hardships, advantages or 



—18— 

disadvantages which may result from such a con- 
struction, the courts have nothing to do. (Gazos 
Creek etc. Co. v. Coburn, 8 Cal. App. ISO, 156 (96 
Pac. 359).) The intention of the parties is, of course, 
to be ascertained from a consideration of the lan- 
guage employed by them and the subject matter of 
the agreement. (Los Angeles Gas & E. Co. v. 
Amalgamated Oil Co., 156 Cal. 776, 779 (106 Pac. 
55).) A contract should be construed, however, as 
an entirety, the intention being gathered from the 
whole instrument, taking it by its four corners. 
Every part thereof should be given some effect. (Sec. 
1641, Civ. Code.) In other words, 'the sense and 
meaning of the parties to any particular instrument 
should be collected ex antecedentibus et consequenti- 
bus; that is to say, every part of it should be brought 
into action, in order to collect from the whole one 
uniform and consistent sense, if that may be done/ 
(Balfour v. Fresno C. & I. Co., 109 Cal. 221, 227 
(41 Pac. 876, 878).) Section 1648 of the Civil 
Code declares that 'However broad may be the terms 
of a contract, it extends only to those things con- 
cerning which it appears that the parties intended to 
contract/ " 

All the evidence given at the trial of the cause, indi- 
cates quite the contrary to any presumption of waiver on 
behalf of the appellant of the terms of the contract. The 
fact that the agents of the appellant were at Baldwin 
Park laying out the show, does not indicate that appel- 
lant was not entitled to rely upon the express language 
of the contract. 



—19— 

In the case of Craig v. White, 187 Cal. 489, the problem 
presented parallels the present case in many respects. It 
was held therein that although the presence of an oppor- 
tunity on behalf of the plaintiff to investigate the title to 
land existed, nevertheless he was not precluded from de- 
manding that a good title be conveyed to him. The Court 
makes the following observations in respect to the re- 
quirements to constitute a waiver : 

"We have been referred to no authority which 
holds that mere opportunity to investigate title be- 
fore entering into a contract of purchase, and the 
implied approval of the title offered by subsequently 
entering into the contract, constitutes a waiver of the 
obligation of the vendor to furnish title on tender of 
the final payment. The fact of inspection and ap- 
proval by the plaintiff here of the deed offered for 
escrow has no significance, because the deed itself 
was regular on its face and purported to convey the 
title to the land contracted for. 

"An examination and acceptance of an imperfect 
title precedent to entering upon a contract to pur- 
chase, by express agreement or under circumstances 
giving substantial advantage to the purchaser, or 
operating to the detriment of the vendor, might op- 
erate as an estoppel. 

"But even an express agreement to buy and pay 
for land to which it was known the vendor had no 
title whatever would be void for want of considera- 
tion. 

"Here there is no claim of an express waiver, and 
there are no circumstances to sustain an equitable 
estoppel of the purchaser. 



—20— 

"It is entirely clear that both parties contracted 
on the belief that the defendant had and could con- 
vey title to the land. The plaintiff, although it does 
not so appear of record, presumably made some 
search or inquiry. The record title appeared to be 
in defendant. The plaintiff, by entering upon the 
contract to purchase, impliedly, at least, expressed 
himself as satisfied that the title was good. We are of 
the opinion that this did not preclude him from re- 
scinding while the contract was still executory, and 
not merged in an executed and delivered deed of con- 
veyance, when he discovered that the defendant had 
no title whatever and could not make such con- 
veyance. 

"As is said in Ruling Case Law (27 R. C. L., p. 
908), 'To constitute a waiver within the definitions 
given, it is essential that there be an existing right, 
benefit or advantage; a knowledge, actual or con- 
structive, of its existence, and an intention to relin- 
quish it. No man can be bound by a waiver of his 
rights, unless waiver is distinctly made, with full 
knowledge of the rights which he intends to waive; 
and the fact that he knows his rights, and intends to 
waive them/ And again: Tn the absence of an ex- 
press agreement a waiver will not be presumed or im- 
plied contrary to the intention of the party whose 
rights would be injuriously affected thereby, unless 
by his conduct the opposite party has been misled, 
to his prejudice, into the honest belief that such 
waiver was intended or consented to/ " 



—21— 

There is no indication throughout the entire testimony 
contained in the record, that the appellee was misled in 
any way to his prejudice by any belief created that there 
was a waiver on behalf of the appellant. 

In Kadow v. City of Los Angeles, 31 Cal. App. (2d) 
324 at 329, the Court states that there must be such a 
showing. 

"Appellant Smith's contention, which appears for 
the first time on appeal, in substance to the effect that 
the failure to file a written claim with him, the offi- 
cer, within ninety days after the accident consti- 
tuted a waiver, is without merit. It is the general rule 
that a party to an action who relies upon a waiver 
must specially plead such waiver. (25 Cal. Jur., p. 
931.) Moreover, 'In no case will a waiver be presumed 
or implied contrary to the intention of the party 
whose rights would be injuriously affected thereby, 
unless by his conduct the opposite party has been 
misled, to his prejudice, into the honest belief that 
such waiver was intended or consented to;' also, 'A 
waiver is the intentional relinquishment of a known 
right with knowledge of the facts.' (Cal. Jur. supra, 
pp. 926, 928.) There is no justification for the appli- 
cation of the doctrine in the case at bar." 

The record is replete with evidence that the appellant 
and its agents were protesting the deficiencies in the equip- 
ment to the agents of the appellee and reporting de- 
ficiencies and demanding that they be repaired. [Pr. Tr. 
pp. 164. 165, 166, 172, 174 and 175.] 



—22— 

In the case of Linnard v. Sonnensckein, 94 Cal. App. 
729, it is stated by the Court: 

"The 'waiver' defense urged is based upon the 
acceptance by plaintiff of various sums on account 
of the rent of the premises after the notice changing 
the terms of the tenancy and the notice to quit. Ac- 
ceptance of rent after a notice changing a tenancy 
or after notice to quit does not necessarily operate 
to waive the notice. While the unconditional ac- 
ceptance by a landlord of moneys as rent, which rent 
has accrued after the time the tenant should have 
surrendered possession will constitute strong evidence 
of the landlord's waiver of the notice to quit, waiver 
always rests on intent and is ever a question of fact." 

Such language clearly indicates that an unconditional 
acceptance might constitue a waiver and is strong evi- 
dence thereof, but in face of the constant protestations of 
the agents and officers of the appellant it cannot be said 
that there was an unconditional acceptance of the equip- 
ment. Such evidence is not disputed and stands uncontra- 
dicted in the record. A finding contrary to such evidence 
in view of the law cannot be sustained. Furthermore, 
from a reading of the record it may appear that all of the 
deficiencies in the equipment were present and apparent 
at the time of the delivery in Inglewood. This is not the 
case. Deficiencies set forth in the notice of rescission 
became evident day by day during the week's possession 
by the appellant. The appellant's decision at Inglewood to 
go on was based only on a knowledge of the existing 
deficiencies. 



—23— 

POINT II. 

The Court Erred in Concluding That a Presumption 
Arose Because the Appellant Failed to Produce 
Certain Physical Evidence, Towit, Some Rope 
Which Was Not in Appellant's Possession But 
Was in the Possession of Appellee, and in Making 
a Finding Upon Such Erroneous Presumption. 

The finding: 

"No part of the broken rope is produced in court 
as evidence, nor is its absence explained. There is 
testimony [37] that the weakness in the rope was 
dry rot, but little weight can be attached to those 
statements, because a rope so afflicted could not be 
detected by a person merely looking at it, as the testi- 
mony shows these witnesses did. They had no spe- 
cial knowledge with relation to it. And the witness 
who spliced the rope testified in this case, but he 
did not say anything about any dry rot or any ap- 
pearance at the broken place of the rope of any un- 
usual condition. The non-production of that, of 
course, would indicate the contrary idea to the dry 
rot." [Pr. Tr. p. 43.] 

is not supported by the facts or the law. 

The Court in drawing the presumption evidently had 
in mind California Code of Civil Procedure, Section 
1963 (5) 

"That evidence wilfully suppressed would be adverse 
if produced." 

It is evident from the reading of this section, that be- 
fore such a presumption can arise, there must be a show- 
ing of wilfull suppression of the evidence. All the equip- 
ment used by the appellant was returned to the appellee, 



—24— 

and it remained in its possession. It is, therefore, im- 
possible to presume that there was any suppression, wilfull 
or otherwise, on the part of the appellant, and that the 
means of production of the rope in Court were not within 
the powers of the appellant. 

In the case of Estate of Moore, 180 Cal. 570, at 585, it 
is said: 

"The court gave the familiar instruction with re- 
spect to the presumption of law that evidence wil- 
fully suppressed would be adverse if produced. This 
was error because the record fails to disclose any 
instance of suppression of evidence or anything that 
could be properly construed as such withholding of 
facts in defendant's possession. That, under the cir- 
cumstances, the error was prejudicial there can be 
no doubt, and this is emphasized when we note that 
one of the counsel for respondents, in his argument, 
sought to apply the rule subsequently announced in 
the instruction to the circumstance that no person 
named in the will had been called as a witness." 

In Hiner v. Olson, 23 Cal. App. (2d) 227 at 234, the 
Court quotes 10 Cal. Jur. 779, Section 86, as follows : 

"When the evidence tends to prove a material fact 
which imposes a liability on a party, and he has it 
in his power to produce evidence which, from its very 
nature, must overthrow the case made against him if 
it is not founded on fact, and he refuses to produce 
such evidence, a presumption arises that the evidence, 
if produced, would operate to his prejudice, and sup- 
port the case of his adversary." 



—25— 

It is quite evident from the testimony, that the condition 
of the rope played a considerable part in the evidence 
offered on behalf of appellant to show that the equipment 
was in good condition and ready for use. It became a 
material issue in the case, sufficient for the Court to make 
a specific finding in that regard. The indication of the 
Court that its finding was based on a presumption, which 
if given to a jury in an instruction would have been 
clearly erroneous, is prejudicial to the appellant and is 
error sufficient to warrant a reversal of the case. 

In Tieman v. Red Top Cab Co., 117 Cal. App. 40, at 46, 
the Court states as follows: 

"Appellants' failure to offer any evidence on these 
issues, although obviously the best advised, requires 
that the above evidence 'be estimated not only by 
its own intrinsic weight, but also according to the 
evidence which it is in the power of one side to pro- 
duce and of the other to contradict'. (Code Civ. 
Proc, sec. 2061, subd. 6.) 'It is a well-settled rule 
that when the evidence tends to prove a material 
fact which imposes a liability on a party, and he has 
it in his power to produce evidence which from its 
very nature must overthrow the case made against 
him if it is not founded on fact, and he refuses to 
produce such evidence the presumption arises that the 
evidence, if produced, would operate to his preju- 
dice, and support the case of his adversary.' (Bone 
v. Hayes, 154 Cal. 759, 765 (99 Pac. 172, 175); 
Alloggi v. Southern Pac. Co., 37 Cal. App. 72 (173 
Pac. 1117); Perry v. Paladini, Inc., 89 Cal. App. 
275 (264 Pac. 580).)" 



—26— 

POINT III. 

The Finding of Fact That the Property Delivered by 
Appellee to Appellant at Inglewood Was at the 
Time of Delivery in Good Condition and Ready 
for Use, Is Not Supported by the Evidence. 

In order to determine whether this finding is supported 
by any competent evidence, we deem it advisable to re- 
view and sumarize for the Court the testimony of the wit- 
nesses touching on the condition of the equipment and its 
fitness for use. 

Paul Eagles testified that he was a merchant. [Pr. Tr. 
p. 63.] In a written statement which was made to coun- 
sel for appellant, and returned to Mr. Marco of the appel- 
lant corporation in Mr. Eagle's letter of June 28th [Ap- 
pellee's Exhibit No. A-2, Pr. Tr. p. 112] the letterhead 
of the witness is not reproduced, which would disclose the 
business of the witness, but it will be noted from this ex- 
hibit that the statement, which appears in the typewritten 
reporter's transcript of testimony page 341, shows that the 
witness is engaged in the feed and fuel business. This 
statement is in no wise repudiated, but the witness states 
it does not meet with his approval because it is just a reci- 
tation of events that happened on the road, and that it 
should be more complete. 

To qualify this witness as to his knowledge of the equip- 
ment, it is shown by his testimony that he was the sub- 
lessee of said equipment from November, 1938, until 
around March, 1939. [Pr. Tr. p. 70.] However, when 
the equipment was to be taken out by the appellant he hired 
a mechanic to look over the equipment, and it was reported 
to him that the wagons were useable. [Pr. Tr. p. 72.] 
Over objection [Pr. Tr. p. 72] the witness was allowed 



—27— 

on such foundation to give his opinion regarding the condi- 
tion of the wagons. 

The witness states that he did not make a personal ex- 
amination of the tent rigging, blocks, and falls. [Pr. Tr. 
p. 73.] 

The witness testified as to the condition of the seats and 
chairs, and stated that he had used them on previous oc- 
casions, but he did not state that they were in useable 
condition as of the time they were delivered to Ingle- 
wood. [Pr. Tr. p. 73.] 

The knowledge of this witness with respect to the ward- 
robe was acquired from a report of a subordinate that 
there were certain items missing and that it needed clean- 
ing. [Pr. Tr. p. 73.] 

The sleeping cars were without blankets, sheets or pil- 
low cases, and there were no berth curtains. [Pr. Tr. p. 
74. ] The witness did not know whether any of these mate- 
rials were furnished except that berth curtains were ob- 
tained in San Diego. [Pr. Tr. p. 75.] 

In regard to the supplying of elephant howdahs, this 
witness testified that he had no discussion regarding them ; 
that he does not remember any request having been made 
for their delivery. [Pr. Tr. p. 75.] 

When this witness was questioned regarding his knowl- 
edge of the condition of the equipment prior to leaving 
Baldwin Park, he stated that it is true that he selected the 
equipment and knew either from his own knowledge or 
from the knowledge of subordinates as near as possible as 
it was for anyone to know from that extent of the equip- 
ment loaded in three days. [Pr. Tr. p. 78.] The rest of 
the testimony of this witness concerns the operation of the 



—28— 

circus subsequent to the time of the delivery of the equip- 
ment, and if bearing upon other points will be discussed 
under those topics. 

On cross-examination, the witness was questioned re- 
garding his knowledge of the equipment and in respect to 
the wagons he stated that he examined them only in a 
general way. [Pr. Tr. p. 101.] He did not examine the 
axles or boxings ; that he selected them merely for size and 
their ability to carry load. [Pr. Tr. p. 101.] 

In respect to the train decks, this witness states that 
generally speaking they were in good condition, but repairs 
were made both at Inglewood and San Diego. [Pr. Tr. 
p. 102.] 

In regard to the condition of the rope, this witness said 
that it was neither good nor bad, that it would be medium, 
and when asked if he remembers making the statement that 
the ropes were all in very poor condition [Rep. Tr. p. 343, 
line 3, to p. 344, line 2], he could not recall. [Pr. Tr. p. 
107.] 

This witness further stated on cross-examination that 
it is possible that he made the statement ; that he knew the 
elephant howdahs never arrived; that the wardrobe was in 
bad condition, some entirely unuseable. [Pr. Tr. p. 107.] 

In considering Mr. Eagles' testimony these facts must 
be kept in mind : 

Although working for appellant, he was called by appel- 
lee as an adverse witness [Rep. Tr. p. 9, line 10, to p. 50, 
line 6] and examined under the broad latitude of cross- 
examination. He was not an adverse witness and there 
was no showing to justify such examination. It is ap- 
parent that the witness was in conference with appellee's 



—29— 

counsel, and that at the same time he refused to discuss 
the matter with appellant's counsel. [Rep. Tr. pp. 50- 
55.] Calling the witness as an adverse witness was done 
to give his testimony the effect of having been wrested 
from the appellant, and reluctantly given, while appellee 
would make it appear that the witness was adverse to ap- 
pellee. The fact is, Mr. Eagles was a very willing wit- 
ness for appellee, no doubt because this was appellant's 
only circus venture, while appellee would require feed for 
the animals for a long time to come. 

Furthermore, the witness had difficulty in stating any- 
thing particular that had been discussed with appellee's 
counsel and could only generalize. Is it not more reason- 
able to assume that his statement made to counsel for ap- 
pellant on June 13, 1939 [Rep. Tr. p. 341, line 16] within 
two weeks after the circus closed and the equipment was 
returned, is more apt to be in line with the facts, than his 
testimony offered at the trial, which was November 27, 
1940, a few days lacking a year and a half after the close 
of the circus. And the witness never did deny the state- 
ment ! In returning it to Mr. Marco, he said that it didn't 
meet with his approval because "it is just a recitation of 
events that happened while the Great American Circus was 
on the road and I believe it should be more complete if 
it is to be submitted to use in the settlement of a claim". 
[Rep. Tr. p. 345, line 11.] 

Not an untrue recitation of events, but incomplete. 
Counsel that took the statement testified concerning it 
[Rep. Tr. p. 340] and while it may be said this testimony 
is not entitled to any greater credence than any other 
testimony, yet the Court should take into consideration 
that counsel was an officer of the Court in which he was 
testifying and had been so for many years. Furthermore, 



—30— 

counsel's testimony is fully corroborated by his secre- 
tary. [Rep. Tr. p. 336, line 26.] 

The cross-examination of Mr. Eagles with respect to 
the statement he made on June 13, 1939, is interesting. 
[Rep. Tr. pp. 73-83.] Some of this testimony is repro- 
duced : 

"Q. These are the same questions I have hereto- 
fore asked you, and very briefly I will refer to this, 
because it is the only time you and I ever had a con- 
ference, and it was in my office on June 13th, 1939, 
in my presence and in the presence of my stenog- 
rapher. Did you say, 'It took us about an hour 
and a half to get the wagon up, and this delayed us 
in our show, causing us to miss the afternoon's per- 
formance entirely'? A. I didn't, because I wouldn't 
have made that statement, because I called the show 
in the afternoon at Santa Ana. 

Q. Did you state, 'Another reason for our delay 
was occasioned by a wagon carrying the big top side 
poles to run hot'? A. That was the wagon that 
had the side poles on it. 

Q. Did you state to me that, 'Another reason for 
our delay was occasioned by a wagon carrying the big 
top side poles to run hot'? A. That doesn't make 
much sense. That isn't good language there, that 
I can understand, on that statement you just read. 

Q. Do you wish me to read it to you again? A. 
If you will, please. 

Q. 'Another reason for our delay was occasioned 
by a wagon carrying the big top side poles to run 
hot'. A. Anyway, the wagon — 

Q. Did you make that statement to me at the 
time stated? A. I don't believe so. 



—31— 

Q. Did you say, 'The axles were not in proper 
alignment and the wheels, instead of slanting in at 
the bottom, were slanting out, causing friction in 
the wheel box'? Did you so state to me? A. I 
wasn't making statements to you. 

Q. Did you make that statement to me in my of- 
fice at the time stated? Will you please tell me, if 
you can? A. I can't recall. 

Q. You don't recall? A. No. 

Q. I will ask you if, at the time heretofore stated, 
you didn't make the following statement to me: 'In 
leaving Santa Ana the rope on the No. 4 broke. 
This was due to the poor condition of the rope, caus- 
ing one of the main center poles to fall. No one 
was injured, fortunately'? A. No. 4 what? That 
is not a very complete sentence. 

Q. I don't know. A. Neither do I. 

Q. I am saying only what you told me. I can't 
change it. 'In leaving Santa Ana the rope on the No. 
4 broke. This was due to the poor condition of 
the rope, causing one of the main center poles to 
fall. No one was injured, fortunately.' A. There 
is something out of that sentence. It might have 
referred to No. 4 pole. 

Q. All right. Did a No. 4 pole fall or break or 
cause any trouble? A. I don't remember. 

Q. You don't remember? A. No. 
Q. My question is, did you so state to me? A. 
I know I didn't make that statement, just 'No. 4'. 
I know I didn't make that. 

Q. Did you make the substance of that statement 
in a little different form to me? 

Mr. Combs: That is objected to as not proper 
cross-examination. 



—32— 

The Court: Yes. I will have to sustain that 
objection. 

Q. By Mr. Schaefer: Your answer is then, that 
you did not make that statement, do I understand? 

The Court: I so understood him to say. 

Mr. Combs: That is what he said. 

Q. By Mr. Schaefer: All right. Did you say 
to me at the same time: 'another wagon ran hot on 
the way to the train at Santa Ana, causing a fur- 
ther delay'? A. It was the same wagon. 

Q. Did you make that statement? A. I don't 
believe I did. It was the same wagon, going and 
coming, that we had trouble with. 

Q. I will ask you if you remember stating to 
me, on the same occasion, 'As a result, we didn't get 
out of Santa Ana until 6:30 a. m., whereas we should 
have been out not later than 3 :00 a. m. Accordingly, 
we arrived in Pasadena on Memorial Day around 
10:00.' Did you so state to me? A. Those are 
about the figures, but I can't recall the conversation. 

Q. By Mr. Schaefer: Then did you tell me as 
follows: 'We greased all the wagons causing us 
trouble on the flat cars, but nevertheless on the trip 
from the train to the lot in Pasadena, which is a long 
haul, we had wagon trouble — wheels smoking and 
causing delay.' Did you so state to me? A. I 
don't remember, and I don't remember the trouble 
with the wagons. 

Q. Did you have any difficulty in the erection 
of the equipment in Pasadena? A. Yes. 

Q. What difficulty did you have? A. The rope 
broke three times. 

Q. The rope broke three times? A. Yes. 

Q. Did the main falls break? A. That is the 
main falls. 



—33— 

Q. Will you explain for the benefit of the court 
what are meant by the main falls? A. That is 
the rope that pulls the tent up to the top of the 
center pole. 

The Court: The center pole? A. Yes, the cen- 
ter pole. 

Q. By Mr. Schaefer: Block and falls is similar 
to what is known as block and tackle, isn't it? A. 
That is right. 

Q. Did any of the performers refuse to perform 
that evening? A. Why, they didn't, after an ex- 
planation. They started to refuse. 

Q. Did any of them come to you and tell you 
they wouldn't go out? A. Yes, Walter Guice. 

Q. What Walter Guice is that? A. He had the 
aerial bar. 

Q. The aerial bar? A. Yes. 

Q. Did anybody else refuse to go up? A. I 
don't think anybody else actually refused. Ernie 
White was standing there with him. 

Q. Did he refuse to go up? A. I don't believe 
he did. He was standing there. 

Q. What is his act, Ernie's? A. An upside 
down balancing act. 

Q. Stood on his head in a trapeze? A. That 
is right. 

Q. Did these performers finally go up? A. Yes. 

Q. Did you have to make some rearrangement 
of the equipment? A. No. It had already been 
made by George Singleton. 

Q. What was it that was done? A. He just 
made fast their bars, so that they couldn't fall down 
on top of them. 

Q. How did he do that? A. I believe with a 
chain or rope, or something like that. 



—34— 

Q. It wasn't the ordinary way that the equip- 
ment was ordinarily fastened? A. It has been done 
before. 

Q. It isn't the ordinary way, though, is it, Mr. 
Eagles? A. Not the ordinary way, no. 

Q. What was the condition of the rope in Pasa- 
dena? Was it good or bad? A. Just like any sec- 
ond-hand rope. 

Q. Would that be good or bad? A. It would 
be medium. 

Q. Do you remember telling me on the occasion 
mentioned, The ropes were all in very poor condi- 
tion'? Did you so state to me? A. I can't recall it. 

Q. Do you remember stating to me, 'While we 
had some green labor, yet the equipment itself delayed 
us tremendously'? Did you so state? A. I don't 
recall that part of the conversation. 

Q. The elephant howdahs never came out, did 
they? A. No, not to my knowledge. 

Q. What condition was the wardrobe in? A. I 
didn't examine it personally. George King did, the 
wardrobe man. 

Q. Did you see the wardrobe at all? A. I saw 
it in the fall. 

Q. How did it look? A. Well, all right. There 
were some additions made to it at different times. 

Q. Who made the additions? A. I believe Fan- 
chon & Marco. 

Q. Was some of the wardrobe unusable? A. 
We didn't take all the wardrobe. I don't know 
whether it was unusable or not. 

Q. Did you state to me at the time mentioned, 'I 
know that the elephant howdahs never arrived; that 
the wardrobe was in bad condition, some entirely un- 
usable'? Did you so state? A. I might have. I 
probably told you that." 



—35— 

We submit that the interest of the witness and this 
impeachment, renders his testimony of little value, and 
at any event, it was highly improper and error to permit 
Eagles to be examined as an adverse witness. 

The witness, Charles W._Nelson, testified that prior to 
the 23rd of May, he had been to Baldwin Park and 
observed that some of the wheels appeared as though they 
had dried out in the sun. [Pr. Tr. p. 116.] He further 
states in response to an inquiry as to whether the equip- 
ment was useable or unuseable that he thought it was 
useable from observation and his slight knowledge of 
what technical details are necessary for the production 
of a performance. [Pr. Tr. p. 117.] 

It must be observed that the evidence as given by 
these witnesses was gained from hearsay, that neither 
had made a thorough examination of any part of the 
equipment, nor in fact was either hired for this purpose; 
that any inspection of the equipment, especially pertain- 
ing to the seats and chairs, had been made at previous 
times and not within the time before the equipment was 
delivered on the 23rd day of May, 1939. The evidence 
of Eagles also shows that there was in fact some equip- 
ment missing and that the same was not supplied until 
subsequent to the date of delivery; that there were in 
fact repairs made to the equipment shortly after its de- 
livery. 

The most important and persuasive argument showing 
that the evidence given by Charles W. Nelson is entirely 
incompetent, and that a finding of fact based thereon is 
entirely unsupported, is that from his own admission he 
states that he has a slight knowledge of the technical 
details necessary for the production of a show; and that 



—36— 

with this slight knowledge he concluded the equipment 
was useable. This is clearly an expression of opinion 
evidence, some of which was admitted over the objection 
of the appellant, and it is shown that from the basis 
of the witness' opinion, the evidence is highly incompetent 
and not worthy of consideration by the trier of facts. 

That such equipment was useable is far short of a 
compliance with the terms of the contract. It is self- 
evident that a piece of equipment may be useable, but 
not be in good condition such as was in the contemplation 
of the parties when this contract was made. 

The contract was made with the purpose in mind that 
appellant would operate a circus as a going business for 
from five to twelve weeks. Much more was in the minds 
of the parties than that the equipment should be useable 
— it was expressly provided that it must be in good con- 
dition and ready for use in the production of an operating 
circus. 

The next witness whose evidence we must consider is 
that of George Singleton, called on behalf of the appellee. 
The witness was questioned regarding the condition of 
the wagons and testified that they were in fairly good 
shape, suitable for the transportation of a circus; that 
they were second-hand equipment. [Pr. Tr. p. 125.] 

It was stated by the witness that in Santa Ana there 
was trouble with one of the wagons going on to the lot 
and that the same wagon gave them trouble the next day. 
[Pr. Tr. p. 129.] 

It will be noted that the testimony of this witness is in 
itself contradictory, for the witness states that the wagons 
are in fairly good shape and then in response to a ques- 
tion covering the same facts, states that they are in good 
condition and ready for use. [Pr. Tr. pp. 132 and 134.] 



—37— 

In regard to the rest of the equipment, this witness 
makes no affirmative statement, except that he does state 
[Pr. Tr. p. 134] that he did inspect the tent rigging, 
blocks, falls and chairs. 

This witness had also been in the employ of appellant. 
He had a suit pending against appellant and counsel for 
appellee was also his counsel. [Rep. Tr. p. 118.] He 
made a statement on June 6, 1939, within one week after 
the equipment was returned. [Rep. Tr. p. 332, line 5.] 
Mr. William Gamble, of counsel for appellant, testified 
concerning the taking of this statement. [Rep. Tr. p. 
329.] This was substantiated by the stenographer. [Rep. 
Tr. p. 336, lines 8-25.] 

The testimony of Ralph J. Clawson states that he did 
inspect the 20 wagons that were delivered at Inglewood, 
and in response to a question whether they were in good 
condition and ready for use, the witness responded that 
they were in useable condition and could be used. [Pr. 
Tr. p. 143.] 

In regard to the train flat decks and runs, the witness 
states that there were some places that were bad, but that 
they decided they could fix it up at San Diego. [Pr. 
Tr. p. 144.] 

The witness thinks that the Calliope was useable, but 
states that it was dropped at its delivery in Inglewood 
and that it did not play the rest of the time. [Pr. Tr. p. 
144.] This witness also testified that the wardrobe was 
in useable condition and that the sleeping cars were clean 
and in good condition, but that the sleeping cars were not 
fully equipped. [Pr. Tr. pp. 146-147.] 

The witness testifies in regard to the runs and flat cars 
that they were in good condition; that the runs were new 



—38— 

in 1938, and that it was very good equipment. [Pr. Tr. 
p. 157.] 

On cross-examination this witness was far from posi- 
tive in his statements and contradicted himself by quali- 
fying his answer to the effect that the equipment was 
useable — that it was good enough to use, that it could be 
used, but the witness did not commit himself to the effect 
that the equipment was in good condition and ready for 
use at the time of delivery. [Pr. Tr. p. 158.] 

It is submitted that the evidence as presented by this 
witness considered as a whole, cannot be the basis for 
finding that the equipment was in good condition and 
ready for use as contemplated by the terms of the con- 
tract. The testimony of this witness fully covers the 
conditions under which the circus was operated and such 
testimony fully contradicts any evidence that the equip- 
ment was in good condition for if it had been such the 
method of operation would have not been so fraught with 
trouble and disappointment as related throughout the 
testimony of all the witnesses. 

The witness, J. V. Austin, testified in regard to the 
custom of renting railroad coaches to circuses in order 
to show that it was not necessary for the appellees to fur- 
nish the sheets, pillow cases and blankets. [Pr. Tr. p. 
225.] 

However, as a basis for this testimony on cross-exami- 
nation, it was revealed that this witness had rented circus 
sleeping equipment on two previous occasions and it was 
upon this experience that he based the custom. [Pr. Tr. 
p. 232.] 

The witness was asked his opinion regarding the con- 
dition of the equipment and was allowed to testify over 



—39— 

the objection of appellant, that it looked usable. [Pr. Tr. 
p. 227.] He based his opinion on an observation made 
on one visit to the winter quarters at Baldwin Park prior 
to the 23rd day of May. When asked on cross-examina- 
tion, the witness stated his knowledge insufficient to give 
an opinion. [Pr. Tr. p. 232.] 

It is submitted that such evidence was highly incom- 
petent and could not be made the basis of any finding of 
fact. 

In reviewing the evidence of the witnesses, we consider 
that while the testimony of Murray Pennock and Patrick 
Graham was given on rebuttal, yet it should be considered 
here in analyzing the plaintiff's evidence to sustain the 
findings. 

Murray Pennock testified that he had examined the 
equipment six weeks previous [Pr. Tr. p. 260], for the 
purpose of using it in fiilming a motion picture. [Rep. Tr. 
p. 390.] The witness stated that after making the exami- 
nation for the purpose explained, that the wagons were in 
comparatively good condition, suitable for use. [Pr. Tr. 
p. 262.] That the flat cars were in equally good condi- 
tion. [Pr. Tr. p. 262. ] The riggings, tent, drop and falls 
he did not examine. 

The witness testified that at the opening of the show 
in Inglewood, that he thought the equipment was in per- 
fectly usable condition, so much as he saw of it, but he 
stated that he looked the show over generally. [Pr. Tr. 
p. 263.] 

On cross-examination this witness testified that he did 
not take any of the wheels off of the wagons [Pr. Tr. p. 
266] ; that he was not interested whether the wagons had 
brakes or not; that his interest in the flat cars was for 



—40— 

the purpose of making miniatures for motion picture re- 
production. [Pr. Tr. p. 266.] 

This witness after testifying to the condition of the 
cars, on cross-examination acknowledged that he knew 
of many defects which existed. [Pr. Tr. p. 267.] 

Furthermore, the witness' use of the equipment was 
confined to filming in the making of a motion picture. 
Of course, the equipment was all right to look at, and 
answered the purpose perfectly in giving circus atmos- 
phere to a motion picture. But such use is not comparable 
to a use in transit. 

The witness, Pat Graham, who was porter of the sleep- 
ing cars, stated that he cleaned them. [Pr. Tr. p. 277.] 
They intended to sleep 267 people and the only equipment 
was 67 sheets. [Pr. Tr. p. 279.] As to the cleanliness 
of the equipment, the witness stated that they were fairly 
clean; that berth curtains were not obtained until they 
reached San Diego. [Pr. Tr. p. 279.] Without any 
foundation as to the knowledge of the witness concerning 
the condition of the wagons and the runs, he was allowed 
to give his opinion as to their condition. [Pr. Tr. p. 280.] 
Over objection of appellant, the Court refused to strike 
out the answers. 

This is a summary of all the pertinent evidence in the 
transcript regarding the condition of the equipment, and 
its arrival in Inglewood, and upon its delivery to the 
appellant. 

One of the conditions in the contract [Pr. Tr. p. 8] to 
be performed on behalf of the appellee was that such 
equipment should be in good condition and ready for use. 
The appellee so alleged in his complaint, and by this testi- 
mony as above summarized, attempted to prove that as an 
element necessary for recovery in this cause of action. 



—41— 

Throughout the testimony, as recorded in this record, it 
is shown that the appellant relied upon this representation 
of the appellee; that the equipment would be in good con- 
dition and ready for use because of the fact that they 
had made commitments with sponsors and had become 
obligated to produce a circus or become liable in damages 
on contracts with the sponsors. [Pr. Tr. p. 250.] 

It is quite evident from this testimony that the appellee 
has not performed the obligation under its contract. As 
shown by the testimony of the witnesses for the appellant 
[Pr. Tr. pp. 163, 172], promises were repeatedly made on 
behalf of the agents for the appellee that the equipment 
would be put in condition and repair so that the appellant 
could continue the operation of the circus. It is shown 
that upon these representations the appellant continued to 
operate the circus for a period of one week and by the 
testimony of appellee's own witness, there was delay after 
delay occasioned by faulty equipment. The appellant was 
forced to miss performances which caused a substantial 
reduction in all its receipts and which made the operation 
of the circus absolutely impossible. 

Appellant relied upon these representations that the cir- 
cus equipment would be in good condition and ready for 
use, and it was impossible for the appellant to discover 
some of the latent conditions until after it had had the 
equipment in its possession for a period of time. It was 
for that reason, that the appellant continued to operate 
the circus for a period of a week before exercising its 
right to rescind. A substantial effort to comply with its 
provisions of the contract, and an attempt to put the 
equipment in good condition so that it would be possible 
for it to operate, was made before the appellant returned 
the equipment and rescinded the contract. 



—42— 

POINT IV. 

The Court Erred in Finding That the Appellant Com- 
pany Engaged in the Show Business Was Familiar 
With the Circus Business and Knew About Ropes, 
and That It Must Have Known How Long the 
Rope Would Likely Continue in Use. [Findings, 
Pr. Tr. p. 40.] 

It is evident that in this finding the Court misunder- 
stood the testimony with respect to the knowledge of the 
appellant company and its officers regarding their knowl- 
edge as to the operation of the circus business, and also 
with the knowledge as to the condition of the circus equip- 
ment. There is no testimony on behalf of the witness 
Marco Wolff, that he knew anything with respect to the 
operations of a circus. 

In respect to the testimony of Wayne Dailard, who 
was the coordinator or general manager of the circus, his 
knowledge is found in the following testimony [Rep. Tr. 
pp. 236-237]: 

"Q. By Mr. Schaefer: Mr. Daillard, what is 
your business or occupation? A. I am in the amuse- 
ment business. 

Q. How long have you been in that business? A. 
20 years. 

Q. Were you ever employed by Fanchon & Mar- 
co? A. Yes, sir. 

Q. When? A. Early in 1939. 



—43— 

The Court: You say the amusement business. 
There are many kinds of amusements. What par- 
ticular line? A. Theaters, principally. 

The Court: Theaters? A. Theater business, that 
is right. 

The Court: Show business? A. Yes. 

The Court: Circus? A. No. 

Q. By Mr. Schaefer: Were you employed by 
Fanchon & Marco in connection with the Great 
American Circus? A. Yes, sir. 

Q. What position did you have with the Great 
American Circus? A. I acted as the coordinator or 
general manager. 

Q. What is a coordinator? A. I was the con- 
tact between the actual circus operation and the of- 
fice." 

Even considering the testimony of Paul Eagles and 
George Singleton, who very obviously were prejudiced 
against the appellant, there is no showing that either one 
of these men was particularly familiar with the condition 
of ropes. They were, it is conceded, experienced in the 
operation of a circus. It is undoubtedly true that the de- 
fendant was engaged in the show business, and had had 
a great deal of experience in the production of stage and 
theatrical performances; however, this would not endow 
them with the knowledge of circus operation. Is it not 
logical that for this reason paragraph 8 was deleted from 
the contract? 



—44— 

POINT V. 

The Court Erred in Finding That There Was No Dry 
Rot in the Rope and That Dry Rot Could Not Be 
Detected by a Person Looking at It, and That the 
Witnesses Had No Special Knowledge. [Findings, 
Pr. Tr. p. 43.] 

The Court finds [Pr. Tr. p. 43] : 

"There is testimony that the weakness in the rope 
was dry rot, but little weight can be attached to 
those statements, because a rope so afflicted could 
not be detected by a person merely looking at it, as 
the testimony shows these witnesses did. They had 
no special knowledge with relation to it. And the 
witness who spliced the rope testified in this case, but 
he did not say anything about any dry rot or any 
appearance at the broken place of the rope of any 
unusual condition. ... At the time of the break- 
ing of the rope the man who was in charge of that 
department was an old showman. He was working 
in his line of business in making this exhibition. If 
that had broken because of dry rot, he would have 
discovered it, and he would have reported it to the 
defendant, and a part of the rope, or the broken 
part, would have been saved as a matter of protec- 
tion to the defendant. But this was not done.' , 

The Court has utterly failed to understand the testi- 
mony. Every portion of this finding is entirely without 
support. 

We shall consider the finding in its several parts, and 
the testimony with respect thereto: 

First, the Court says, little weight can be attached to 
the statements that there was drv rot because this could 



-^5— 

not be detected by looking at it, and that the witness had 
no special knowledge with relation to it. There are three 
witnesses that testified to the dry rot: — Walter Guice, 
Charles H. Priest, Jr., and George Singleton, the man re- 
fered to as the old showman. 

Guice's deposition was taken, and he was subjected to 
cross-examination. He says that he has been in the show 
business for many years, and that he and his family have 
an aerial act. It is his business to know about rope be- 
cause his and his family's lives depend upon what he 
knows about rope. He established himself as an expert. 

"Q. What type of act was that that you had? A. 
Horizontal bars, aerial act, with four people. 

Q. Can you explain the type of equipment that 
that act called for? A. Called for pulley blocks and 
ropes and steel cable, steel pipe and hickory bars. 

Q. Are you familiar with the various kinds of 
ropes used in the circus? A. I am. 

Q. How long have you been familiar with the 
type of ropes used in the circus? A. I acquired that 
knowledge through a period of about thirty years." 
[Rep. Tr. p. 366.] 

"Q. Did you attend to the putting up of your 
equipment at Pasadena at night? A. I did. 

Q. Did you notice anything about the equipment 
that was different? A. No; the only thing is I re- 
fused to go up in the main falls of the big top, and 
I informed the manager I refused to let anyone of 
my people go up in them. 

Q. Can you tell us what the main falls are? A. 
The main falls holds the big top and the riggings. 

Q. What is a fall? A. Pulley block and rope. 



Q. That holds the main circus tent? A. That is 
right, and the canvas and the rigging; there is four 
of them. They had a four-pulley top. one at each 
pole. 

Q. Is that the rope upon which all the riggings 
of the various acts and equipment are supported? A. 
Yes, sir, where all the big riggings is hung, and then 
they have a ring that they hang on the quarter pole. 

Q. And your rigging was supposed to be hung 
onto what? A. From the pole ring of the big top. 

Q. Why did you refuse to go up that night? A. 
The main fall on the center pole on which our rig- 
ging was hung was bad and I wouldn't take no 
chances on it. 

Q. What was wrong with it? A. The ropes 
showed dry rot. 

Q. That is, the rope? A. Yes, sir. 

Q. What was the condition of the rope? A. It 
was frayed out and didn't look safe. 

Q. And you and the members of your act re- 
fused to go up because of the condition of the rope? 
A. That is right." [Rep. Tr. pp. 368A-369.] 

He, and his family were performers in this circus, and 
that he examined the rope, and that it did have dry rot, 
and that he refused to go up until his appliances were 
first hooked up by chains. 

"Q. Did you think that because of the condition 
of the rope you wouldn't risk doing your act? A. 
Yes, sir. 

Q. Because why; were you afraid? A. Afraid 
the main fall would break and let us down and it 
would cripple somebody. 



—47— 

Q. What did the manager do, you say? A. Sent 
out and got some chain and lashed the bale ring of 
the big top io the center pole so in the event the 
rope would break it wouldn't come down; it would 
stay there. 

Q. Do you know from your many years of ex- 
perience in the circus business and in the use of 
these riggings, whether the bale ring is ordinarily 
lashed to the pole? 

Mr. Combs: We object to that as irrelevant, in- 
competent and immaterial; no proper foundation laid, 
and calls for a conclusion of the witness. 

A. No, they are never lashed." [Rep. Tr. pp. 
369-370.] 



"Q. Had you noticed the condition of the main 
falls before that time? A. No, sir, until I seen them 
break putting up, and then I went up and examined 
them when they had my rigging up. I seen them 
break when I put the rigging up and I examined 
them. 

Q. What condition did you find them in when you 
examined them? A. Dry rot, indicating they had 
been laying around and not used. 

Q. Can you explain a little more fully what you 
mean by dry rot? A. This rot exists after it is in 
a real dry place. It is manila rope, and they gen- 
erally put a little tar in it and it drys out, just like 
you put grease in the cable, and it lays there and 
dries out, and dust gets in there and cuts the fiber 
and it eventually gets dry, and when it gets dry it is 
just like powder; it falls apart. Manila rope is oiled; 
it has some kind of oil in it, and if you aren't using 



—48— 

it it dries out and causes dry rot. Dust gets in it 
and cuts it, and they break up from being pulled over 
iron sticks or iron edges, and that cuts the fibers, 
and it finally weakens." [Rep. Tr. pp. 37S-379.] 

Mr. Priest, produced by the appellant, testified that he 
had had twenty years' experience with ropes, and that he 
examined the rope after it broke in Pasadena and found 
it to have dry rot. [Pr. Tr. p. 246.] 

Considering the testimony of George Singleton, the old 
showman, who the Court said would have discovered the 
dry rot had it existed. It is apparent that from the fol- 
lowing testimony [Pr. Tr. pp. 131-132] : 

"A. I finally got one wagon, and then they com- 
menced to come. Then along, I think when I was 
raising the big top, a fall became fouled, and when 
I hooked the elephant to it, the rope which fouled in 
the block, it cut the rope off. That was the lead line 
on the ground, the one that goes through the snatch 
block. And so I had to splice this rope. 

Q. Did you do that personally? A. Yes. And 
proceeded to finish raising the canvas on the big 
top." [164] 

"The Court: You say, T spliced the rope.' What 
was the condition of the rope where it separated? 
A. The rope was in usable condition. I bought the 
rope myself and had been using it. I had been 
handling this property since 1937, and had replaced 
new rope from time to time, and rebuilt seats and 
poles, and whatever was necessary." 



that this witness did not give any answer regarding the 
condition of the rope in respect to dry rot. The answer 
is evasive in that it is a general statement of opinion and 
not a direct answer to the Court's inquiry. 

This is the man, the Court will remember, that had 
worked for the appellant but who testified on behalf of 
the appellee; the man that had a suit pending against 
the appellant in which the attorney for the appellee was 
also his counsel [Rep. Tr. p. 118]; this is the man that 
made a statement a short time after the circus closed and 
then repudiated it, and came into the camp of the appellee. 
[See Rep. Tr. p. 332 and pp. 120-123.] Therefore, we 
must not consider him as appellant's witness, and assume 
that he would have testified to a disclosure as to the 
condition of the rope. The ropes were all in the pos- 
session of the appellee, and none were produced by them. 

In this finding, the Court has stated that it is impos- 
sible to detect the existence of dry rot by merely looking 
at the rope. This finding is entirely unsupported by any 
evidence. It is evidently an assumption or presumption 
that the Court has indulged in without due consideration 
of the evidence. All the testimony with respect to the 
condition of dry rot given by witnesses who have had 
considerable experience in handling ropes is that upon 
an examination they discovered the existence of dry rot. 



—50— 

POINT VI. 

The Court Erred in Finding That There Was No 
Evidence That the Wagons Had Been Greased or 
Oiled and Drawing a Conclusion Therefrom That 
They Had Not Been Greased or Oiled, and at the 
Same Time Finding That the Appellant Employed 
a Staff of Efficient Showmen as Heads of the 
Several Departments. [Findings, Pr. Tr. p. 44.] 

If the Court is to assume that there were efficient heads 
of the department, it is only fair to conclude that they had 
sense enough to grease a wagon the same as they must 
have had to feed a horse. 

Why should the Court consider as a presumption that 
the wagons were not greased, rather than conclude that 
the presumption is that they were greased. The testi- 
mony of Mr. Priest that the spindles and axles were bent 
[Pr. Tr. p. 242] would indicate that the heating was 
caused by something far greater than lack of grease. 
There is direct testimony, however, that shows that they 
were greased; but despite this fact, they continued to give 
trouble [Pr. Tr. p. 94] : 

"A. The same wagon gave us trouble going back, 
although we had greased it. 

Q. But you greased it and it did operate all right? 
A. No. It gave us trouble. It had another hot 
box." 



—51— 

POINT VII. 

The Court Erred in Concluding That the Appellant 
Accepted the Property "Without Discovering Any 
Fault of Any Sort or Fashion", and Then Immedi- 
ately Concludes Further That the Appellant 
"Assumed to Make Reconditioning for Such 
Needed Repairs as Were Apparent." [Pr. Tr. p. 
45.] 

The evidence shows conclusively that the appellee never 
complied with the contract in delivering one circus train 
consisting of seven flat cars, two stock cars, two coaches 
and two sleepers, at lessor's expense, in good condition and 
ready for use to the lessee at Inglewood, California. The 
evidence does show that the cars were not in good condi- 
tion or ready for use, and that they could not be used 
because of Inter-State Commerce Commission Regulations. 

There is in evidence, various agreements entered into 
between the appellant and certain sponsors. [Deft's 
Exs. 1-13; Pr. Tr. pp. 250-257.] It should, therefore, be 
quite apparent that the appellant was legally bound to pro- 
vide circus shows for these sponsors at the time and place 
named in these several contracts. The circus train was 
delivered in an improper and dangerous condition. The 
appellant was not thinking about legal rights and techni- 
calities, but was trying to perform its contracts with its 
sponsors and at the same time carry out its contract with 
the appellee. In this endeavor, the appellant seeing that 
the appellee had wholly failed in this regard, ordered the 



—52— 

cars fixed. In the printed transcript, pages 194 to 217, 
appears Defendant's Exhibit No. 17, consisting of the 
reproduction of bills and repairs made to these cars. 

Considering the position of the appellant at the time 
the circus equipment was delivered and also taking into 
consideration the promises made by the agents of the ap- 
pellee, that the equipment would be in good condition and 
ready for use, it cannot be contended that there was any 
assumption on the part of the appellant to recondition the 
equipment. It has been pointed out wherein the equipment 
was deficient in the argument under Point III. These 
were substantial elements but appellant was faced with a 
situation wherein it had to attempt to fulfill its obligations 
to its sponsors without sanctioning any of the deficiencies 
and relying upon the promise of the appellee that they 
would be corrected. The appellant attempted to go for- 
ward and produce the circus. The finding that there was 
an assumption on the part of the appellant to recondition' 
at its own expense the equipment, and thus constituting 
a waiver is rebutted completely, we believe, by the argu- 
ment in Point II. 



—53— 
POINT VIII. 

The Court Erred in Concluding That Appellant Closed 
the Circus Because Threatened With a Closed 
Shop by Labor Unions. 

If the Court will consider the appellant's exhibits 
(1 to 13) [Pr. Tr. pp. 250-257], it will be apparent that 
these sponsors' contracts provided for the production of a 
circus for the sponsor. Naturally, it was up to the appel- 
lant to provide the equipment. Failure of equipment, as 
between the sponsor and the appellant, must rest on the 
shoulders of the appellant, but not necessarily so as be- 
tween the appellant and appellee. Why should it be 
thought incredible, that the appellant on discovering that 
it could not carry on, because of the poor equipment, at- 
tempt to put itself in the best possible position, in making 
settlements with its sponsors? There was no effort on the 
part of appellant to put something over on the appellee. 
The telegrams which were sent to the sponsors were stipu- 
lated in evidence at the time of the pretrial hearing. It 
is true that Mr. Kramer of the American Federation of 
Music wanted a closed shop. Had appellant desired to 
avail itself of this type of relief and had it thought that 
the equipment could not be made to work, it could easily 
have handled Kramer in such a way that he would have 
called out the union men at Inglewood, and thus given 
the appellant the right to avail itself of the defense to 
the sponsors' contracts. But the fairness and honesty of 
the appellant is shown in no better way than its actions 
at a time when it least thought of legal difficulties, and 



—54— 

when it could not be deemed to be putting itself in a good 
legal position. While the appellant was trying to make 
the equipment function, it was also keeping the union 
quiet in its demands. For one week, appellant continued 
attempting to make things go. The record is replete with 
failure of equipment ; wheels burning, rope breaking, poles 
falling, missed and delayed performances, and to this the 
appellee says — green labor. But green labor didn't break 
dry rotted ropes; green labor didn't make wagon wheels 
burn; green labor didn't delay performances, because ap- 
pellee's expert, Mr. Singleton, testified that he had the tent 
up in Inglewood in three hours without difficulty, and 
could have put it up in less time. [Rep. Tr. p. 124.] 

Appellee is simply taking advantage of a situation in 
which the appellant sent out telegrams and availed itself 
of a legal defense as against the sponsors after Kramer 
had called out his union labor due to a greater degree on 
account of the poor conditions. [Pr. Tr. pp. 235-238.] 



—55— 

POINT IX. 

Opinion Evidence. 
The Admission of Opinion Testimony Must Be Pre- 
ceded by a Proper Foundation Showing That the 
Witness Is Qualified as an Expert by Reason of 
His Superior Knowledge and It Must Be Shown 
That He Has Had an Opporunity for Observation 
in Order to Draw His Conclusion Therefrom. 
In considering the issue that the evidence set out in 
specification of error, Point IX, was erroneously ad- 
mitted, the foundation of the evidence must be kept in 
mind in order that the substantial character of these er- 
rors be apparent. 

Conceding for argument that the evidence was of such 
a peculiar nature that opinion testimony was proper, nev- 
ertheless, such opinion evidence gained by the expert must 
be based on some knowledge of the facts by observation. 
The distinction being that the expert is allowed to draw 
conclusions from his observation. However, we shall at- 
tempt to point out that these experts did not have suffi- 
cient foundation in observation to permit them to testify. 
The excerpt of the testimony above set forth is force- 
ful argument in itself that there was not a sufficient 
knowledge upon the part of this witness to express an 
opinion as to the condition of the wagons at the time in 
question. 

In the first place the witness states he did not himself 
examine, but had a mechanic by the name of Forbes re- 
port to him. It is upon this hearsay evidence that the 
opinion is based. This objection goes to the force of the 
witness' whole testimony, for the Court upon the showing 
of his knowledge of the circus business allowed further 
opinion testimony as to items of equipment. [Pr. Tr. pp 
71-74.] 



—56— 

It cannot reasonably be said that this witness had the 
foundation to come within the language as set forth in 
the leading case of Vallejo & Northern Ry. Co. v. Reed 
Orchard Company, 169 Cal. 545, 570: 

"Witnesses who are skilled in any science, art, 
trade or occupation, may not only testify to facts, 
but are sometimes permitted to give their opinions 
as experts. This is permitted because such witnesses 
are supposed, from their experience and study, to 
have peculiar knowledge of the subject of inquiry 
which jurors generally have not. ... To war- 
rant its introduction, the subject of inquiry must be 
one relating to some trade, profession, science or 
art in which the persons instructed therein, by study 
or experience, may be supposed to have more skill 
and knowledge than jurors of average intelligence 
may be presumed generally to have (Ferguson v. 
Hubbel, 97 N. Y. 513 (49 Am. Rep. 544); Young 
v. Johnson, 123 N. Y. 233, (25 N. E. 363); Ex- 
celsior etc. Co. v. Sweet, 57 N. J. L. 231, (30 Atl. 
553).) 'When this experience is of such a nature 
that it may be presumed to be within the common 
experience of all men of common education, moving 
in the ordinary walks of life, there is no room for 
the evidence of opinion; it is for the jury to draw 
the inference. . . . It is not because a man has 
a reputation for superior sagacity and judgment, and 
power of reasoning, that his opinion is admissible. 
. . . It is because a man's professional pursuit, his 
peculiar skill and knowledge in some department of 
science, not common to men in general, enable him 
to draw an inference, where men of common experi- 
ence, after all the facts proved, would be left in 
doubt." 



—57— 
POINT X. 

Opinion Evidence. 

The admission of the evidence under specification of 
error, Point X. was allowed by the statement of the 
Court on the theory that the witness was an expert and 
familiar with the business engaged in by the appellant. 
Such an allowance is undoubtedly made for the admission 
of such testimony under the proper circumstances. 

Code of Civil Procedure, Sec. 1870, subd. 9. 

"The opinion of a witness respecting the identity 
or handwriting of a person, when he has knowledge 
of the person or handwritng; his opinion on a ques- 
tion of science, art, or trade, when he is skilled 
therein ;" 

Such exception, however, has no application to the pres- 
ent situation, and made no observation upon which he 
could base an opinion. The witness by his testimony was 
not present at the happening of the event referred to, and 
the question propounded to him is not confined to the 
reason for the accident as described in his testimony but 
is merely a conjecture as to what is usually the cause of 
such an accident and is not confined to this particular 
event. It is purely speculative evidence, whether given by 
an expert or whether given by a layman, it is clearly 
inadmissible. 



—58— 
POINTS XI and XII. 

Opinion Evidence. 

The testimony under Points XI and XII may be con- 
sidered together. In both instances the witness testified 
that he made a very minute examination of the equipment. 
Even though the Court refuses to rule on the objection, 
he was allowed to state "that it looked to him to be use- 
able". Such testimony does not even come within the 
category of an opinion, although it certainly has that 
force and effect. The witness testified that it looked to 
be useable. It is inconceivable upon what theory such 
evidence was admitted. It is true that the trial court is 
to determine the qualification of an expert witness and has 
a wide discretion in the determination thereof, but it is 
submitted that the Court clearly abused its discretion in 
permitting such evidence as hereinabove set out in the 
record. 

Howland v. Oakland Cons. St. Ry. Co., 110 Cal. 
513, at 521; 

Kinsey v. Pac. Mat., 178 Cal. 153; 

Bobbie v. Pac. Gas & Elec. Co., 95 Cal. App. 781. 



—59— 

POINT XIII. 

The Judgment Is Not Supported by the Findings in 
That There Is No Finding to Sustain the Allega- 
tion of the Complaint That the Appellee Made an 
Effort to Mitigate Damages as Alleged in Its 
Complaint. 

The appellee has not maintained the burden of proof 
as to damages. The appellee has alleged in its complaint 
[Pr. Tr. p. 2] "that plaintiff made every endeavor dur- 
ing the remainder of the term of said contract, to let said 
property to others but was unable so to do." There is no 
testimony by any witness produced on behalf of the ap- 
pellee that any effort was made whatsoever to mitigate 
the damages by renting the equipment or attempting to 
rent the equipment to others. While it may be the rule 
that proof of mitigation of damages rests upon the de- 
fendant, in the instant case the appellee has assumed by 
this allegation the burden of proving damages sustained. 

It is said in Wilson v. Crown Transfer, Etc. Co., 201 
Cal. 701, 706: 

"Where the plaintiff alleges that the goods stored 
were lost by fire due to negligence of the defendant, 
then the burden of proving these allegations is upon 
the plaintiff, but when the plaintiff's pleadings con- 
tain no such allegation, but the defendant, seeking to 
justify its refusal to return the goods, sets up their 
destruction by fire and alleges that the fire was not 
due to its fault or negligence, then the burden is upon 
the defendant to prove the allegation of its affirma- 
tive defense and show that it was free from negli- 
gence as to the cause of the fire." 



—60— 

It is submitted that these cases are closely analogous to 
the instant case and that the reasoning therein is applica- 
ble here. 

Dieterle v. Bekin, 143 Cal. 683; 

C us sen v. Southern Calif. Savings Bank, 133 Cal. 
534; 

U-Drive, Etc., v. System Auto Parks, 28 Cal. App. 
(2d) 782. 

There is no showing that any attempt to rent the 
equipment was made during the remaining term of the 
contract. Dismissing all other points of error urged, the 
most that appellee could recover would be for one week, 
less the repairs and improvements made by the appellant. 

Conclusion. 

In conclusion, we submit: 

1. The appellant had a right to look to the contract 
in determining the legal rights of the parties. This pro- 
vided that the appellee would deliver to appellant at In- 
glewood the equipment named, in good condition and ready 
for use for at least five weeks; that the same was taken 
without examination and the appellee was not relieved of 
the law of California, as set forth in Section 1955 of 
the Civil Code. 

2. The equipment was not received in good condition 
and ready for use and some of it was missing entirely. 

3. The defects as set forth in the notice of rescission 
were not fully known until the day the equipment was re- 
turned. The defects appeared on each day. The testi- 
mony shows that at Inglewood the cars were repaired at 



—61— 

a cost of over $300.00; the Calliope didn't play, the ele- 
phant howdahs were not delivered. At San Diego, addi- 
tional repairs had to be made to the flat cars by putting 
on new decks. At Santa Ana, the runs caused a wagon 
to tip over in leaving the car ; wheels burned ; and wagons 
were delayed. In leaving Santa Ana, a pole was dropped, 
fortunately no one was hurt. In Pasadena, the matinee 
on Memorial Day was missed, although there was a huge 
crowd present. The rope broke three times, and the tes- 
timony shows there was dry rot. At Pomona there was 
a further delay, and the afternoon performance was so 
late that its value was lost. These delays were not labor 
as is indicated where there were only sixteen men to 
erect a tent in Inglewood. This could have been done in 
Pasadena if the ropes had held. 

4. The appellant had no alternative with such equip- 
ment and with the danger of injury to the public, and it 
may well be understood that the last thing it would want 
to do would be to face the sponsors in their unfulfilled 
promise to perform. 

5. The rescission did not take place because of labor 
trouble. There was no reason to unionize a circus that 
could not perform, and the union representative himself 
testified that the condition of the equipment and the safety 
of his members was a consideration. 

6. The rescission on the part of the appellant being 
justified, there should have been no judgment against it, 
but it should have recovered the damages which it sus- 
tained, and which the Court found to be $23,323.93 for 
one week. [Pr. Tr. p. 45.] 

7. The appellee has failed to offer any evidence on the 
allegation contained in paragraph IV, "That plaintiff 



—62— 

made every endeavor during the remainder of the term of 
said contract, to rent said property to others but was un- 
able so to do", and having adopted this as part of its case 
was bound to offer some proof. If the Court believed 
that the other issues had been met by the appellee by a 
preponderance of the evidence, yet with proof lacking on 
this issue, the appellee's recovery should be mitigated to 
one week, less the expenses incurred by the appellant in 
repairs to the equipment. 

In conclusion, we submit that the judgment should be 
reversed and findings be made accordingly. 

Respectfully submitted, 

Macfarlane, Schaefer, Haun & Mulford, 
James H. Arthur and 
William Gamble, 

By Henry Schaefer ; Jr., 

Attorneys for Appellant. 



No. 9779. 
IN THE 

United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



Fanchon & Marco, Inc., a corporation, 

Appellant, 
vs. 

Hagenbeck-Wallace Shows Company, a corporation, 

Appellee. 



APPELLEE'S ANSWERING BRIEF. 



Combs & Murphine, 
Lee Combs, 
Thos. F. Murphine, 
John F. Reddy, Jr., 
925 Pacific Southwest Building, Los Angeles, 

Attorneys for Appellee. 

FILED 

JUI 1941 



Parker & Baird Company, Law Printers, Los^tjlfri^^ p„ O'S 



TOPICAL INDEX. 



PAGE 



Statement of Pleadings and Facts Disclosing Basis of Jurisdiction 1 

Statement of the Case 5 

Summary of Argument 9 

Point I (In Answer to Appellant's Point III) 11 

Where a case is tried before the court the trial judge has the 
sole right to believe or reject the testimony of a witness 
and the sufficiency of evidence to establish a given fact is 
also a question for the trial court 11 

Point II (In Answer to Appellant's Points I and VII) 16 

A deleted clause in an instrument or other extrinsic evidence 
is inadmissible to show intention, waiver or non-waiver, or 
other interpretation where the contract is plain, unambiguous 
and certain and waiver is a question of fact to be deter- 
mined by the trier of the facts 16 

Point III (In Answer to Appellant's Point VI) 23 

The condition and usability of the wagons as a part of the 
equipment was a question for the trial court 23 

Point IV (In Answer to Appellant's Points II, IV and V) 24 

The submission of weaker evidence when stronger could have 
been produced should be viewed with distrust and, in any 
event, the trial court is the sole and final judge of the 
credibility of witnesses and testimony produced, and the 
knowledge of the agent is knowledge of the principal 24 



11. 

PAGE 

Point V (In Answer to Appellant's Point VIII) 32 

The court had a right to conclude from the admission of 
appellant that one of the reasons for closing the show was 
the calling out of a number of the performers by the busi- 
ness agent of the American Federation of Actors 32 

Point VI (In Answer to Appellant's Points IX, X, XI and XII) 34 

The qualifications of expert witnesses and the admission of 
opinion evidence is a matter within the discretion of the 
trial court, and there can be no abuse of that discretion 
where the trial is before the court without a jury and the 
court only gives the testimony such weight as it ought to 
have 34 

Point VII (In Answer to Appellant's Point XIII) 41 

There is no need of a finding on an immaterial allegation of 
the complaint in relation to mitigation of damages where 
appellant submitted no evidence in relation thereto and the 
stipulation and agreement of the parties, confirmed by the 
court at the pretrial hearing, limited the issues and did not 
include "mitigation of damages" as an issue 41 

Conclusion 44 



lii. 

TABLE OF AUTHORITIES CITED. 

Cases. page 

Andersen v. La Rinconada Country Club, 4 Cal. App. (2d) 

197, 40 Pac. (2d) 571 41 

Boyd v. Chivers, 134 Cal. App. 566, 25 Pac. (2d) 878 22 

Dobbie v. Pacific Gas & Elec. Co., 95 Cal. App. 781, 273 Pac. 

630 40 

Easom v. General Mortgage Co., 101 Cal. App. 186, 281 Pac. 

514 42 

Faires v. Title Ins. & Trust Co., 15 Cal. App. (2d) 350, 59 

Pac. (2d) 428., 31 

Feckenscher v. Gamble, 12 Cal. (2d) 482, 85 Pac. (2d) 885.... 15 
First National Bank v. Caldwell, 84 Cal. App. 438, Point 9, 

258 Pac. 411 39 

Goodwin v. Robinson, 20 Cal. App. (2d) 283, 66 Pac. (2d) 

1257 15 

Hiner v. Olson, 23 Cal. App. (2d) 227, 72 Pac. (2d) 890, 73 

Pac. (2d) 945 29 

Howland v. Oakland etc., 110 Cal. 513, 42 Pac. 983 39 

Int. Circuit v. United States, 306 U. S. 208, 83 L. Ed. 610, 59 

S. Ct. 467 29 

Kinsey v. Pacific Mutual Life Ins. Co., 178 Cal. 153, 172 Pac. 

1098 39, 40 

Kramer v. Associated Almond Growers, 111 Cal. App. 595, 

295 Pac. 873 42 

Lompoc Produce v. Browne, 41 Cal. App. 607, 183 Pac. 166.... 22 

Moore, Estate of, 180 Cal. 570 29 

Neher v. Kauffman, 197 Cal. 674, 242 Pac. 713 14 

Ringling Bros.-Barnum & Bailey Combined Shows v. Olvera, 

119 Fed. (2d) 584 44 

Schick v. Equitable Life Assur. Soc, 15 Cal. App. (2d) 28, 

59 Pac. (2d) 163 22 

Stransky v. Callan, 81 Cal. App, 476, 253 Pac. 960 15 

Tieman v. Red Top Cab Co., 117 Cal. App. 40, 3 Pac. (2d) 381 29 

Vallejo v. Reed Orchard Co., 169 Cal. 545, 170 Pac. 426 38 

Vitagraph, Inc., v. Liberty Theatre Co., 197 Cal. 694, 242 Pac. 

709 41 



IV. 

PAGE 

Weissbaum v. Eibeshutz, 211 Cal. 170, 294 Pac. 396 14 

Wilson v. Crown Transportation, 201 Cal. 701, 258 Pac. 596 43 

Statutes. 

California Civil Code, Sec. 1625 17 

California Civil Code, Sec. 1956 21 

California Civil Code, Sec. 1957 21 

California Civil Code, Sec. 2332 31 

California Code of Civil Procedure, Sec. 1844 27 

California Code of Civil Procedure, Sec. 1847 14 

California Code of Civil Procedure, Sec. 1856 17 

California Code of Civil Procedure, Sec. 1870, Subdiv. 9 38 

California Code of Civil Procedure, Sec. 1963, Subdiv. 5 27, 28 

California Code of Civil Procedure, Sec. 1985 28 

California Code of Civil Procedure, Sec. 2055 12 

California Code of Civil Procedure, Sec. 2061, Subdivs. 6-7-27, 28 

Circuit Court Rules, Rule 19, Subdiv. 6 4, 12 

Circuit Court Rules, Rule 20, Subdiv. 3 5 

Federal Rules of Civil Procedure, Rule 16 44 

Federal Rules of Civil Procedure, Rule 34 28 

Federal Rules of Civil Procedure, Rule 43b 12 

Rules of Civil Procedure for the District Courts of the United 

States, Rule 75 4 

28 United States Codes Annotated, Sec. 41(1) 3 

28 United States Codes Annotated, Sec. 225, Para, a 3 

28 United States Codes Annotated, Sec. 230 4 

Warehouse Receipt Act, Stats. 1909, Sec. 8, p. 437 43 

Textbooks. 

70 American Law Reports 1326 29 

1 California Jurisprudence 846, Sec. 125, Point 8 31 

2 California Jurisprudence 916, Points 1-2 14 

10 California Jurisprudence 1160, Point 5 13 

22 California Jurisprudence 999 to 1001, Sees. 72-73 18 

25 California Jurisprudence, Sec. 8, pp. 932-933 22 

10 Ruling Case Law 884 29 

27 Ruling Case Law 912 .. 22 



No. 9779. 
IN THE 



United States Circuit Court of Appeals 



FOR THE NINTH CIRCUIT 



Fanchon & Marco, Inc., a corporation, 

Appellant, 
vs. 

Hagenbeck-Wallace Shows Company, a corporation, 

Appellee. 



APPELLEE'S ANSWERING BRIEF. 



Statement of Pleadings and Facts Disclosing Basis 

of Jurisdiction. 

This appeal was taken by Fanchon & Marco, Inc., a 
California corporation, from a judgment in favor of 
Hagenbeck-Wallace Shows Company, an Indiana corpora- 
tion, in the amount of $15,006.07, awarded after a trial by 
Court, jury trial having been waived. The complaint in this 
matter alleges that plaintiff and defendant are respectively 
corporations organized under the laws of the States of 
Indiana and California and that the amount involved in 
this action exceeds the sum of $3000.00. It alleges the 
execution on May 22, 1939, of a contract between the 
parties hereto, attached to the complaint as Exhibit "A". 
It alleges performance by the plaintiff in conformity with 
the terms thereof of the delivery at Inglewood, Cali- 



— 2— 

fornia, of certain circus property, equipment and animals 
covered by the said contract, the acceptance thereof by 
defendant under the terms of the contract and the repudia- 
tion, after more than one week's use of said equipment, 
of the contract and the return of the equipment to the 
winter quarters of plaintiff. It alleges that plaintiff suf- 
fered damages in the amount of $1600.00, cost of feeding 
and caring for animals and equipment for four weeks re- 
maining under said contract after repudiation thereof by 
defendant, and the failure to pay five items of $2500.00 
each, being the five weekly rental payments due under the 
contract. In addition thereto, the plaintiff seeks recovery 
of interest on the unpaid sums, as provided by law, and 
for other items particularly appearing in the complaint, de- 
mand for the same and default on the part of defendant 
having been alleged. There were two common counts 
in the complaint which were dismissed at the pre-trial 
hearing. The defendant's answer denies the obligations 
as due, alleges that the equipment was not in good condi- 
tion and ready for use for circus purposes when deliv- 
ered, as required under the contract, and sets up several 
affirmative defenses, including fraud and misrepresenta- 
tion in connection with the condition of the equipment at 
the time the contract was entered into, failure of consid- 
eration in connection therewith and impossibility of 
adaptation of the equipment delivered by plaintiff to the 
use for which defendant contracted for the same. In 
addition, a counterclaim on behalf of the defendant was 
filed, alleging in substance that the condition of the equip- 
ment was not as required by the contract, and that the 
defendant suffered damages in the sum of $2500.00 for 
repairs in connection with the same, and for $50,000 for 
loss of profits as a result of its inability to use the same. 



— 3— 

A reply to the counter-claim was filed. Later the counter- 
claim was amended and a reply to the amended counter- 
claim in substance denying the allegations therein con- 
tained was filed. 

The action was commenced in the United States District 
Court, in and for the Southern District of California, 
Central Division, and the pleadings were at issue in that 
Court. The statutory provision believed to sustain the 
jurisdiction of the District Court is 28 U. S. C A., Sec. 
41 (1). The statutory provision giving this Honorable 
Court jurisdiction on appeal to review a judgment of the 
District Court is 28 U. S. C. A., Sec. 225, Par. a. 

The pleadings necessary to show the existence of juris- 
diction are the complaint [Pr. Tr. pp. 2 to 14], the answer 
and counter-claim of defendant Hagenbeck-Wallace 
Shows Company [Pr. Tr. pp. 14 to 26], plaintiff's reply 
to the counter-claim [Pr. Tr. pp. 26 to 28], defendant's 
amended counter-claim [Pr. Tr. pp. 28 to 32], and the 
reply to amended counter-claim [Pr. Tr. pp. 32 to 35]. 

A pre-trial was had and the issues defined in the Order 
on pre-trial [Pr. Tr. pp. 35, 36] and the Certificate of pre- 
trial hearing under Rule 16 [Pr. Tr. pp. 36 to 39] and 
confined the issues to the condition of the equipment when 
delivered to the defendant and to losses, if any, recover- 
able that were occasioned by the deficiency of the equip- 
ment, if any. The judgment was entered in the District 
Court on December 3, 1940 [Pr. Tr. p. 46]. Notice of 
Appeal was filed by appellant on the 16th day of January, 
1941 [Pr. Tr. p. 48]. Bond on appeal in the sum of 
$20,000.00, covering both judgment and costs, was filed 
by appellant on January 16, 1941 [Pr. Tr. p. 49]. 



-4— 

The typewritten transcript of record was filed and 
docketed in this Honorable Court on the 29th day of 
March, 1941 [Pr. Tr. p. 285], within the time allowed 
for the docketing of said transcript. Thereafter, the 
printed transcript of record was prepared pursuant to a 
designation of record on appeal and amended designation 
of record on appeal, in accordance with Rule 75 of the 
Rules of Civil Procedure for the District Courts of the 
United States, the designation having been hied on the 
12th day of March, 1941 [Pr. Tr. p. 52] and the 
amended designation having been filed on the 13th 
day of March, 1941 [Pr. Tr. p. 54]. A designation 
of parts of records necessary for consideration of this 
case pursuant to Rule 19, Subdivision 6, of this Honorable 
Court, was filed in conformity with said rule [Pr. Tr. pp. 
287 to 291]. An appellee's designation of documents, 
records and proceedings to be included in record on ap- 
peal and to be included in the printed transcript thereof 
was filed in the manner provided by the Rules of Court 
in connection with the same by appellee on April 2, 1941 
[Pr. Tr. pp. 291 to 294]. 

The statement of points relied upon by the appellant was 
filed at the same time and as a part of the Appellant's 
designation of parts of record, on the 2nd day of April, 
1941 [Pr. Tr. p. 286]. 

The transcript of record was filed in this Honorable 
Court on the 29th day of March, 1941, and all proceed- 
ings have been taken within the time provided by the Rules 
of Court and the provisions of 28 U. S. C. A., Sec. 230. 



— 5— 

Statement of the Case. 

There are a number of statements in Appellant's State- 
ment of the Case which under Rule 20, Sub. 3 of the Rules 
of this court, Appellee controverts. Therefore we are set- 
ting out herewith Appellee's Statement of the Case. 

The Appellee in this case is an Indiana corporation, and 
is engaged in the circus business, and in April and May of 
1939 had on hand in its winter quarters at Baldwin Park, 
California, a large amount of circus equipment, including 
performing animals, elephants, etc., which it was willing 
to lease. 

The Appellant is also a corporation incorporated in the 
State of California, and is engaged in the general show or 
public amusement business, and during the months of 
April and May, 1939, decided to put on a circus in Cali- 
fornia to be known as the Great American Circus, for an 
indefinite number of weeks but not less than five weeks, 
and from May 2, 1939, to May 19, 1939, Appellant con- 
tracted with a number of sponsors in various California 
cities to put on a three-ring circus. Nine such contracts 
were made prior to May 22, 1939 and four made after 
May 22, 1939, up to and including May 29, 1939. 

Negotiations were carried on between Ralph Clawson, 
the local manager representing Appellee, and Charles W. 
Nelson, booking agent for Appellants, Daillard, the ap- 
pointed general manager for the Great American Circus 
and Marco Wolff, the vice-president of Fanchon & Marco, 
the Appellants, in relation to leasing a part of the circus 



equipment held by Appellee in its winter quarters at 
Baldwin Park, California, sufficient in kind and variety, 
including 10 elephants and other animals, to enable the 
Appellants to put on a three-ring circus in conformity 
with their contracts with the sponsors. 

During these negotiations, the Appellants' agents Dail- 
lard and Nelson, visited the location of the equipment ac- 
companied by Mr. Clawson, and on May 18, 1939, the 
Appellants employed George Singleton, of 40 years ex- 
perience in the circus business and a former employee of 
Appellee, as a "boss canvasman" in charge of the "big 
top" and all the equipment, including poles, ropes, chairs, 
chains, wires, blocks, falls and tackles, and instructed him 
to go to Baldwin Park and start laying out the equipment 
needed and to employ the necessary men to assist him 
in the matter. 

The next day, or on May 19, 1939, Appellants hired 
as manager Paul Eagles, a circus man of 25 years' experi- 
ence, to take charge of selecting the equipment and to 
obtain skilled men to take charge of the various depart- 
ments of the circus and to manage the same. 

The local manager and agents of both parlies could not 
come to an agreement, and the Eastern representatives 
of both parties were consulted at New York, who finally 
on May 22, 1939, two days before the circus was to open 
in Inglewood, entered into the written lease agreement 
which is set out in full in the printed transcript. While 
the contract was made in New York it was to be per- 
formed solely in California. 



— 7— 

In the meantime the entire equipment had been inspected 
and selected and the "big top" had been erected by Single- 
ton and his crew at Baldwin Park, and upon the signing 
of the agreement was immediately torn down and the 
circus transported to Inglewood for the opening show on 
May 24, 1939. 

The equipment was transferred by the leased circus 
train, but the Appellants were informed by the Santa Fe 
officials that certain repairs were needed to the train to 
conform to certain Interstate Commerce rules. Marco 
Wolff, the vice-president of the Appellants, after consulta- 
tion and agreement with Clawson, the agent of Appellees, 
hired the repairs made by the Santa Fe Railroad and 
charged the expense to Appellee. In a like manner certain 
other minor repairs were made and minor articles pur- 
chased, and the expense charged to Appellee. 

The Great American Circus showed in Inglewood May 
24, 1939, two performances; San Diego, May 26-27-28, 
1939, five performances; Santa Ana, May 29, 1939, one 
performance; Pasadena, May 30, 1939, one performance, 
and Pomona, May 31, 1939, two performances. 

In Pomona the business agent for the American Federa- 
tion of Actors called out certain acts on strike and the 
circus immediately closed and the equipment was returned 
to Baldwin Park, California, and on the 1st day of June, 
1939, the Appellants gave notice of rescission, claiming 
the equipment leased by them was not in "good condition 
and ready for use" and that this fault compelled the Ap- 



pellants to close the show. Appellees have claimed the 
failure of the show was due to poor management in mak- 
ing poor contracts with sponsors from a financial stand- 
point, green, inexperienced labor for the circus and not 
enough time to break them in, and finally the calling out 
on strike of the band and certain special acts and features, 
compelling the closing of the show. 

The initial payment of $2500.00 due Appellee on de- 
livery of the circus equipment at Inglewood was never 
paid by Appellant, nor were the four notes of $2500.00 
each called for by the agreement ever delivered to Appellee 
and on November 10, 1939, Appellee filed this action in 
the United States District Court, Southern District of 
California, Central Division, for $15,475.14, together with 
interest thereon. 

After a pre-trial hearing on November 25, 1940, in 
which it was stipulated that the issue would be confined 
to the condition of the equipment on its delivery, and 
after a trial of three days before the Court sitting without 
a jury, the Court found for Appellees and gave judgment 
to them in the amount of $15,006.07. The defendant 
(Appellants) have appealed to this Court and the matter 
is now before them, and this is Appellee's Answering 
Brief to Appellant's Opening Brief. The matters in- 
cluded in this statement are hereafter referred to in the 
brief and the page and line of the printed transcript is 
set out for each fact herein stated. 



Summary of Argument. 

POINT 1. 
In Answer to Appellants' Point III : 

Where a case is tried before the Court, the trial judge 
has the sole right to believe or reject the testimony of a 
witness, and the sufficiency of evidence to establish a given 
fact is also a question for the trial court. 

POINT 2. 
In Answer to Appellant's Points I and VII : 

A deleted clause in an instrument or other extrinsic 
evidence, is inadmissible to show intention, waiver or non- 
waiver or other interpretation, where the contract is plain, 
unambiguous and certain, and waiver is a question of fact 
to be determined by the trier of the facts. 

POINT 3. 
In Answer to Appellant's Point VI: 

The condition and usability of the wagons as a part of 
the equipment was a question for the trial court. 

POINT 4. 

In Answer to Appellant's Points II, IV and V: 

The submission of weaker evidence when stronger evi- 
dence could have been produced, should be viewed with 
distrust and in any event the trial court is the sole and 
final judge of the credibility of witnesses and testimony 
produced, and the knowledge of the agent is knowledge 
of the principal. 



—10— 

POINT 5. 
In Answer to Appellant's Point VIII: 

The Court had a right to conclude from the admission 
of Appellant that one of the reasons for closing the show 
was the calling out of a number of performers by the 
business agent of the American Federation of Actors. 

POINT 6. 

In Answer to Appellant's Points IX, X, XI and XII : 

The qualifications of expert witnesses and the admission 
of opinion evidence is a matter within the discretion of 
the trial court, and there can be no abuse of that discre- 
tion where the trial is before the Court without a jury 
and the Court only gives the testimony such weight as it 
ought to have. 

POINT 7. 

In Answer to Appellant's Point XIII: 

There is no need of a finding on an immaterial allega- 
tion of the complaint in relation to mitigation of damages, 
where Appellant submitted no evidence in relation thereto 
and the stipulation and agreement of the parties confirmed 
by the Court at the pre-trial hearing limited the issues and 
did not include "mitigation of damages" as an issue. 



—11— 

POINT I. 

In Answer to Appellant's Point III. 

Where a Case Is Tried Before the Court the Trial 
Judge Has the Sole Right to Believe or Reject 
the Testimony of a Witness and the Sufficiency 
of Evidence to Establish a Given Fact Is Also a 
Question for the Trial Court. 

In the interest of continuity of thought and as a logical 
sequence in argument we are answering Appellant's Point 
III first, because we believe this to be the gist of Appel- 
lant's entire argument. Obviously if the "circus equip- 
ment" listed by Appellant was as the trial court found, 

"all of the property that was delivered and accepted 
at Inglewood was in good usable condition" [Pr. 
Tr. p. 40, lines 28-29], 

there is nothing left of Appellant's argument, for all of 
Appellant's other points are corrollaries to his Point III. 

In justification for Appellant's contention that this 
finding by the trial court is not justified by the evidence, 
Appellant reviews the testimony of witnesses Eagles, 
Singleton, Clawson, Austin, Pennock and Graham, and 
attempts to discredit the testimony of Eagles and Single- 
ton, respectively, the manager and boss canvasman of the 
Great American Circus and employees of Appellant, and 
the agents who, with others, inspected, selected and as- 
sembled the equipment at Appellant's winter quarters at 
Baldwin Park prior to the date of the lease agreement. 
Appellant was not only given an opportunity to inspect, 
but did in fact, by his authorized agents, inspect and select 
every piece of the equipment out of the great mass of 
like equipment belonging to Appellee. 

\ 



—12— 

Appellant's criticism of witnesses Eagles and Singleton, 
and reference to their testimony, is in great part taken 
from the reporter's transcript and not a part of the 
printed transcript. (App. Op. Br. pp. 28 to 37.) 

We understand that the rules of practice of the Circuit 
Court of Appeals, Ninth Circuit, to be 

That the Circuit Court will not consider parts of 
the record not printed. 
Rule 19, Subdiv. 6, 

and that the Court will not consider the parts of the 
reporter's transcript cited by Appellant. (We therefore 
object to consideration of any part of the reporter's 
transcript.) We shall therefore omit further reference 
to said portions of Appellant's Opening Brief. Neither 
shall we consider Appellant's undignified attempt to dis- 
credit the witness Eagles by his argument (Op. Br. p. 29) 
based on matters not in any record, to-wit, that because 
said witness was a merchant and in the feed business he 
should not be believed because he wanted to sell feed for 
the Appellee's circus animals. 

Appellant further charges error (Op. Br. p. 35, lines 
1 to 4) because the witness Eagles was examined as an 
adverse witness. We submit that Appellee had every 
right, the witness being Appellant's manager, to be exam- 
ined as an adverse witness under the provisions of Section 
2055, C. C. P., or Rules of Civil Procedure 43b. No 
objection to Appellee's request to so examine the witness 
Eagles was ever made by Appellant, nor did the Court 
rule on said request. [Pr. Tr. p. 63, line 12.] Nor was 
the witness asked any question that could not have been 
asked on direct examination. [Pr. Tr. pp. 63 to 101.] 
Nor did Appellant ever object to any question asked Mr. 



—13— 

Eagles, except a question calling for an opinion, when 
the trial court, in answer to the objections, said: 

"The Court: He is giving his ideas as a man 
familiar with this sort of business and I think it is 
proper. The Court will only give it such weight as 
it ought to have anyway." [Pr. Tr. p. 89, lines 
6 to 9.] 

The appellant made a weak attempt to impeach the 
testimony of Eagles and Singleton (not contained in the 
printed record, but cited from reporter's transcript on 
pages 30, 31, 32, 33 , 34 and 37 of Appellant's Opening 
Brief). Our only answer to this lien of argument is that 
the trial court heard these witnesses, observed their de- 
meanor on the stand on both direct and cross-examination, 
and evidently believed them. 

In addition, if the testimony of Eagles and Singleton 
were eliminated, there are still a great number of corrobo- 
rative witnesses whose testimony is sufficient to support 
the judgment of the trial court. 

The propositions of law contained in our heading to 
this Point I we believe are so fundamental that it is 
unnecessary to cite more than a few of a long line of 
California decisions to sustain them. 

"Under the Code of Civil Procedure the jury, or 
trial judge sitting in place of a jury, is the exclusive 
judge of the credibility of a witness." 

10 Cal. Jur. 1160, Point 5. 

"Witness presumed to speak the truth. A witness 
is presumed to speak the truth. This presumption, 
however, may be repelled by the manner in which 
he testifies, by the character of his testimony, or by 



—14— 

evidence affecting his character for truth, honesty, 
or integrity, or his motives, or by contradictory evi- 
dence; and the jury are the exclusive judges of his 
credibility." 

C. C. P., Sec. 1847. 

"It is the duty of a reviewing court upon appeal 
to construe the evidence so as to support the judg- 
ment; to accept as true that evidence which tends 
to sustain the findings and judgment (unless it is 
inherently incredible) and to reject as untrue the 
evidence which conflicts therewith. Substantially all 
of the material facts testified to in behalf of defend- 
ants in support of their claim for equitable relief 
were either directly contradicted by the testimony 
of the plaintiff himself or were inferentially contra- 
dicted by the testimony of other witnesses produced 
by him. The trial court was the exclusive judge of 
the credibility of these witnesses. " 

Neher v. Kauffman, 197 Cal. 674, 242 Pac. 713. 

"The amount of credit to be given to the positive 
testimony of a witness is solely a question for the 
trial tribunal, except perhaps where the testimony 
in the light of the undisputed facts is inherently so 
improbable and impossible of belief as to in effect 
constitute no evidence at all." 

2 Cal Jur. 916, Points 1-2. 

"The question of the weight of impeaching evi- 
dence was one that was within the province of the 
trial court." 

Weissbaum v. Eibeshuts, 211 Cal. 170 at 174, 294 
Pac. 396. 



— 15— 

"The question of the credibility of the witness 
whose testimony given during the trial of this action 
was sought to be impeached in the manner described 
was one that was confided exclusively to the deter- 
mination of the trier of facts." 

Goodwin v. Robinson, 20 Cal. App. (2d) 283 at 
289, 66 Pac. (2d) 1257. 

"Upon appeal, appellants challenge the sufficiency 
of the evidence to support the finding of the trial 
court to the effect that the statements made by de- 
fendants to plaintiff were false, and known by the 
defendants to be false, and insist that the evidence 
shows that such statements were true. We cannot 
agree with this contention. Having in mind the 
general rule that all intendments are in favor of the 
judgment and that this court must accept as true 
all evidence tending to establish the correctness of 
the findings as made." 

Feckenscher v. Gamble, 12 Cal. (2d) 482 at 492, 
85 Pac. (2d) 885. 

"It is only in cases where there is no evidence to 
sustain a finding, or where it can be said, as a matter 
of law, that the evidence is insufficient to sustain it, 
that this court has jurisdiction to consider the evi- 
dence. It is the exclusive province of the trial court 
to determine the credibility of the witnesses, and 
from the conflicting evidence determine the disputed 
fact. Those principles have been so often reiterated 
that they have become trite." 

Stransky v. Callan, 81 Cal. App. 476 at 487, 253 
Pac. 960. 



—16- 
POINT II. 

In Answer to Appellant's Points I and VII. 

A Deleted Clause in an Instrument or Other Extrinsic 
Evidence Is Inadmissible to Show Intention, 
Waiver or Non-Waiver, or Other Interpretation 
Where the Contract Is Plain, Unambiguous and 
Certain and Waiver Is a Question of Fact To Be 
Determined by the Trier of the Facts. 

Appellant's Points I and VII are so closely related that, 
in order to avoid repetition, we shall consider them to- 
gether under this one heading. 

It makes little difference whether Appellant under the 
pleadings had the burden of proof on the question of 
whether the leased equipment when delivered at Ingle- 
wood was in poor condition and not ready for use, or 
whether the Appellee should have the burden of proving 
said property was in good condition and ready for use, 
for, under the stipulation and order of the Court, the issue 
was limited to the condition of the equipment when de- 
livered to the defendant [Pr. Tr. p. 39, line 78], and the 
trial court found, after all evidence had been submitted 
by both Appellant and Appellee, that 

"all of the property that was delivered and accepted 
at Inglewood was in good useable condition." [Pr. 
Tr. p. 40, lines 28-29.] 

The agreement of lease between the parties made 
May 22, 1939, is set out in full [Pr. Tr. pp. 8 to 12], and 
calls for delivery of the itemized equipment stored and 
quartered at Baldwin Park, California, to Inglewood on 
May 23, 1939, in good condition and ready for use. 



—17— 

We submit this contract is plain, unambiguous and cer- 
tain, and we can see no reason for the introduction of 
any extrinsic evidence to explain its terms or to show 
lack of knowledge of its subject-matter on the part of 
Appellant. 

C C, Sec. 1625; 
C. C. P., Sec. 1856. 

Appellant is laboring hard to make capital out of a 
deleted clause in this instrument, to the effect that Appel- 
lant had no knowledge of the condition of the equipment, 
when the facts are shown, without contradiction, the 
Appellant's agents had already at the time of the agree- 
ment, inspected, selected and set up the equipment at 
Baldwin Park. Eagles, the manager, and Daillard, the 
coordinator, had started on this work as early as May 
19, 1939. [Pr. Tr. pp. 66-67.] Singleton, the "boss 
canvasman," was already there at that time getting out 
the paraphernalia, having started such work on the 18th 
of May, 1939. [Pr. Tr. p. 121, lines 7 to 13.] Nelson, 
an associate of Fanchon & Marco and manager of the 
Fair Booking Department and in charge of all arrange- 
ments prior to the agreement, together with Daillard, 
had examined the equipment six or eight weeks before 
the show opened. [Pr. Tr. p. 116, lines 20-31.] Single- 
ton, the "boss canvasman" in charge of selecting the equip- 
ment, had assembled same and put the "big top" up at 
Baldwin Park prior to the signing of the agreement [Pr. 
Tr. p. 125, lines 1 to20], in the presence of Daillard and 
Marco Wolf! himself, and it was well known to all that 
the equipment selected was used, or "second-hand, " equip- 
ment. [Pr. Tr. p. 125, lines 18 to 30.] 



—18— 

All this argument by Appellant about extrinsic evidence 
being used in the interpretation of the contract or to show 
non-waiver and all his cases cited to show that Appellant 
did not know the condition of the equipment is just a 
waste of time, for the fact is Appellant did know of the 
condition of the equipment and the trial court so found. 
[Pr. Tr. p. 41, lines 16-13.] 

The only waiver spoken of by the Court was in relation 
to certain needed minor repairs, especially to the circus 
train, and where the cost of such repairs in the amount 
of $332.22 were charged to Appellee and the charges 
accepted at the request of Appellant. This particular 
waiver is fully covered later under this point. 

It will be remembered that the equipment in question 
was well known to all parties prior to the signing of 
the agreement to be "second-hand," or used equipment, 
and the express warranty of "good condition" and "ready 
for use" should be interpreted with the fact in mind that 
the equipment was second-hand and was to be used in 
the circus business. Then "good condition" and "ready 
for use" would be a warranty that the equipment was 
reasonably adapted to the purposes for which it was 
leased. 

22 CaL Jur. 999 to 1001, Sees. 72-73. 

In this connection we again call the Court's attention 
that out of the many hundred of articles of equipment 
leased by Appellant but an infinitesimal number were 
claimed by Appellant to be unfit for its purpose, and all 
these were repaired and made fit at Appellee's expense. 

The conclusion of the Court [Pr. Tr. p. 45, lines 13 
to 21] that Appellant waived any flaws in the equipment 



—19— 

that was reconditioned by them and the cost of which 
was charged to plaintiff (Appellee) is fully justified under 
the facts and the law of California. 

Appellant confines his objection to the equipment leased 
under his Point VII to the circus train, consisting of 
seven flat cars, two stock cars, two coaches and two 
sleepers, and states they could not be used under Inter- 
state Commerce regulations. 

R. V. Kettring, general car foreman for the Santa Fe 
Railroad, called as a witness for the defendants (Appel- 
lants), testified as follows: 

"Q. By Mr. Schaefer: What condition did you 
find the cars in? A. We found the cars at Baldwin 
Park in what we would term, in a railroad term, as 
in fair condition, needing repairs to the safety ap- 
pliances, air brakes, and the running gear of the 
cars, to make them safe to move. 

Q. Will you state what repairs were made and 
give the car numbers, if you can, and state why they 
were made? 

The Court: We don't need that. What other 
defects, if any, did you find in the cars? A. Well, 
I found several little defects that was in violation 
of the Interstate Commerce rules, if we would oper- 
ate the cars over our lines, such as old air lines, 
wheels with worn flanges. And we had one coach 
that was — on request of the parties operating the 
show, they asked us to make repairs — it had a defect 
in violation of the Interstate Commerce rules, and 
these repairs were all made to the cars on our repair 
tracks, prior to their departure for San Diego. The 
cars were brought back from Inglewood to our repair 
tracks, and repairs were made. 

0. By Mr. Schaefer: Mr. Kettring, will you 
look through these bills as quickly as you can and 



—20— 

tell me if they are the original bills that came from 
the Santa Fe to Fanchon & Marco? A. Yes, sir, 
they are. They are the original bills." [Pr. Tr. p. 
191, line 19, to p. 192, line 18.] 

Marco Wolff, the Marco of Fanchon & Marco, the 
Appellant herein, testified concerning the repairs to the 
train and to the conversation with Clawson, the agent 
of Appellant, as follows: 

"A. Yes. Clawson told me that he would get the 
calliope fixed right away, and that the additional 
cross-pieces for the seats would come out, and the 
elephant howdahs were not there, and he said he 
would get us the elephant howdahs right away. He 
said he didn't have any money and he couldn't fix 
up the railroad cars, that his credit wasn't good 
for that, and he asked us to advance the money for 
that. 

The Court: Asked you? A. Yes. And he sug- 
gested that we could deduct from our first payment 
any advances that he might have to make." [Pr. 
Tr. p. 164, line 21, to p. 165, line 2.] 

The bill for these repairs amounted to $332.22. [Pr. 
Tr. p. 193, lines 1 to 10.] It was then paid by Appellant 
and charged to Appellee. 

The trial court found that: 

"This property had been used in the show business, 
some of it for a number of years. The ropes had 
been used for one or two years, perhaps two years. 
The defendant is familiar with the show business and 
had been in such business for some time. He knew 
about the ropes, and must have known how long 
those ropes would likely continue in use. The de- 
fendant had in its employ a practical staff of efficient 



—21— 

showmen, who had been engaged in the show busi- 
ness, some for many years." [Pr. Tr. p. 40, lines 
11 to 21.] 

And, continuing, the Court further found: 

"All of the property that was delivered and ac- 
cepted at Inglewood was in good, usable condition. 
Some of it was in need of some repairs, which the 
defendant had made and charged to the plaintiff's 
account, to be deducted from the first payment due 
the plaintiff. The railroad cars needed repairs to 
bring them within the Interstate Commerce require- 
ments. These repairs were made to the cars and, 
after reconditioning, the cars were delivered at Ingle- 
wood." [Pr. Tr. p. 40, line 29, to p. 41, line 6.] 

Appellant meticulously followed the statutes of Cali- 
fornia in relation to hiring personal property, which read 
as follows: 

"A hirer of personal property must bear all such 
expenses concerning it as might naturally be fore- 
seen to attend it during its use by him. All other 
expenses must be borne by the letter." 

Civil Code, Sec. 1956. 

"If a letter fails to fulfill his obligations, as pre- 
scribed by section nineteen hundred and fifty-five, 
the hirer, after giving him notice to do so, if such 
notice can conveniently be given, may expend any 
reasonable amount necessary to make good the letter's 
default, and may recover such amount from him." 

Civil Code, Sec. 1957. 



—22— 

Having made these repairs, and Appellee having agreed 
to pay for same, or having, in the language of the Court: 

"assumed to make reconditioning for such needed 
repairs as were apparent, and charged it to the plain- 
tiff's account with the plaintiff's consent, he waived 
such reconditioning as is shown to have been neces- 
sary and to have been made." [Pr. Tr. p. 45, lines 
17 to 21.] 

Moreover, waiver is a question of fact and is to be 
determined by the Court or jury, except when but one 
inference can be drawn from the facts. 

25 Cal. Jur., Sec. 8, pp. 932-933 ; 

27 R. C. L. 912; 

Boyd v. Chivers, 134 Cal. App. 566, 25 Pac. (2d) 
878. 

"Appellant also contends that the alleged waiver 
by defendant should have been submitted to the jury 
as a question of fact, and that the directed verdict 
was, therefore, improper. While waiver is a mixed 
question of law and fact, when, however, but one 
inference can be drawn from the facts it is not error 
for the court to charge the jury that these facts 
constitute waiver." 

Lompoc Produce v. Browne, 41 Cal. App. 607 at 
613, 183 Pac. 166. 

"Furthermore, the finding of the court that there 
was no waiver is a finding on a question of fact, 
proof of which rested upon appellant. (Citing cases.) 
In view of the record in this case we must accept 
that fact to be true." 

Schick v. Equitable Life Assur. Soc, 15 Cal. App. 
(2d) 28 at 35, 59 Pac. (2d) 163. 



—23— 
POINT III. 

In Answer to Appellant's Point VI. 

The Condition and Usability of the Wagons as a Part 
of the Equipment Was a Question for the Trial 
Court. 

The Appellant, under his Point VI, complains of the 
Court's findings of the condition of the wagons. The 
evidence showed, concerning the wagons, that after they 
had been delivered at Inglewood they had been driven 
several miles in San Diego [Pr. Tr. p. 128, lines 22-23], 
that they had been hauled out of loose sand, where they 
had sunk to the wagonbed, by 60 and 80 H.P. cater- 
pillars [Pr. Tr. p. 127, line 115], and then, the next day, 
on the long haul at Santa Ana, when the wagons were 
loaded beyond their normal capacity and were hauled 
by gas motor-powered trucks at great speed [Pr. Tr. p. 
156, lines 1-26], the spindle on one of the hubs became 
heated (one hub out of 104 or one wagon out of 26) 
and there was no evidence that the wagons during this 
time were greased until after the show at Santa Ana. 
We submit that any reasonable mind, after hearing this 
evidence, would conclude that the wagons, for second- 
hand equipment, were, when delivered at Inglewood, in 
a good usable condition. 



—24— 

POINT IV. 

In Answer to Appellant's Points II, IV and V. 

The Submission of Weaker Evidence When Stronger 
Could Have Been Produced Should Be Viewed 
With Distrust and, in Any Event, the Trial Court 
Is the Sole and Final Judge of the Credibility of 
Witnesses and Testimony Produced, and the 
Knowledge of the Agent Is Knowledge of the 
Principal. 

Appellant's Points II, IV and V are in relation to the 
condition and usability of one item of the equipment, 
to-wit, the ''rope" used to lift the "big top" or main tent 
to its place. The finding of the Court that 

"all of the property that was delivered and accepted 
at Inglewood was in good usable condition" [Pr. 
Tr. p. 40, lines 28-29], 

was discussed under Appellant's Point III of his Opening 
Brief and Appellee's Point I of this Answering Brief, 
and the arguments made by Appellee therein apply equally 
to these points relating to the condition of the "rope," 
as said "rope" is but a minutely small fractional part of 
"all of the equipment." 

Appellant assumes, under his Point II, that the trial 
court had in mind a wilful suppression of evidence by 
Appellant. No intimation was ever made by the Court, 
counsel for Appellee, or anyone else that Appellant wil- 
fully suppressed any evidence. Conjecture of what the 
Court had in mind is neither useful nor of any force 
or effect. The language of the Court is sufficient to 
express the Court's intention, and we submit the finding 
that 

"all of the property was in good condition" 



—25— 

includes the rope and such finding is amply justified by 
the testimony of the witness Singleton alone. He had 
been a "boss canvasman , ' for 40 years; he bought this 
particular piece of rope in the first instance; he inspected 
and selected it as agent of the Appellant; he saw it 
become fouled in the "blocks" and break when pulled on 
by an elephant, and he spliced the rope after the break 
and testified, in answer to a question by the Court, that 
the rope was in usable condition. We set out the pertinent 
part of Singleton's testimony, taken from the printed 
transcript, as follows: 

"Q. When you went out to Baldwin Park when 
Mr. Nelson first employed you, what did you do out 
there? A. I proceeded to get the wagons out and 
get material out, etc., chairs, poles, rigging, canvas; 
I proceeded to get the show together, to load it in 
wagons to go to Inglewood. Then I had an order 
to put the show up in winter quarters. 

Q. Let me ask you about putting it up in winter 
quarters. Do you mean that you set it all up and 
tested it and tried it out? A. Do you know exactly 
how much wagon space it would take to load — 

Q. Did you lay out the falls? A. I put the big 
top up. It was all up in the air, and they came out 
and stopped me and had me tear it down and load it 
to go to Inglewood. 

Q. When did you put it up? A. I think it was 
Friday, finished it Friday night, some time after 
dark. 

Q. That was the same equipment you loaded to 
go to Inglewood? A. Yes. 

Q. And the same equipment the Great American 
Circus used? A. Yes, 



—26— 

Q. And it was all up there, and you looked at it 
in the air, set up, before you left Baldwin Park? 
A. Yes, sir. 

Q. Did anyone else look at it with you? A. 
Why, Mr. Clawson went over some of this stuff, 
and Mr. Daillard was around there, and Mr. Marco 
was all around, looking at the wagons, but I per- 
sonally supervised the sorting and loading of all the 
stuff myself." [Pr. Tr. pp. 124-125.] ^ 

"The Court: You say, 'I spliced the rope.' What 
was the condition of the rope where it separated? 
A. The rope was in usable condition. I bought the 
rope myself and had been using it. I had been 
handling this property since 1937, and had replaced 
new rope from time to time, and rebuilt seats and 
poles, and whatever was necessary. 

The Court: Well, you have answered the ques- 
tion." [Pr. Tr. pp. 131-132.] 

and the testimony of the witness Clawson as follows : 

"Q. In Pasadena did you have occasion to ob- 
serve the working of the main fall there? A. I 
noticed they got the line fouled once or twice there. 

Q. There were elephants pulling that line? A. 
They pulled the cable. The cable goes through the 
block, and sometimes the cable will foul. 

Q. Has an elephant sufficient strength or power 
to pull a rope like that in two? A. An elephant 
don't know his strength when he starts to pull. 

Q. You believe they could pull the main fall in 
two, though? A. Yes, I believe he could, very 
easily. 

The Court: You say an elephant is the motive 
power? A. That pulls the fall up, Your Honor? 



—27— 

The Court: And the rope got fouled? A. It 
got fouled in a block. 

The Court: Where did it tear, between the ele- 
phant and where? A. It broke once right on the 
No. 1 bail ring, and going through the block there 
it got fouled. 

The Court: And broke right at the block? A. 
I think so. It is pretty hard to tell, but that is the 
way I think. And they tie that right onto the bail 
ring." [Pr. Tr. pp. 154-155.] 

That the Court was amply justified in his finding by 
the testimony of the witness Singleton alone is shown by 
section 1844, C. C. P., which reads as follows: 

"The direct evidence of one witness who is entitled 
to full credit is sufficient for proof of any fact except 
perjury and treason." 

C. C. P., Sec. 1844. 

The Court said in his finding as follows: 

"No part of the broken rope is produced in court 
as evidence, nor is its absence explained." [Pr. Tr. 
p. 43, lines 14-15.] 

The Appellant concludes from this language that the 
Court had in mind Sec. 1963, Subdiv. 5, C. C. P. As be- 
fore pointed out, this conclusion is in no way sustained 
by any remark of the Court or anyone else. However, 
the Court could have very properly considered in relation 
thereto, Sec. 2061, Subdivs. 6-7, C. C. P., which read as 
follows : 

"6. That evidence is to be estimated not only 
by its own intrinsic weight, but also according to the 
evidence which it is in the power of one side to pro- 
duce and of the other to contradict; and, therefore, 



—28— 

"7. That if weaker and less satisfactory evidence 
is offered, when it appears that stronger and more 
satisfactory was within the power of the party, the 
evidence offered should be viewed with distrust." 

Sec. 2061, Subdivs. 6-7, C. C. P. 

Or Section 1963, Subdivision 6, C. C. P., in relation to 
disputable presumption, which reads as follows: 

"6. That higher evidence would be adverse from 
inferior being produced." 
Sec. 1963, Subdiv. 6, C. C. P. 

Appellant failed to set out in full the trial court's find- 
ing in relation to this rope, and we continue where Ap- 
pellant left off as follows: 

"At the time of the breaking of the rope the man 
who was in charge of that department was an old 
showman. He was working in his line of business 
in making this exhibition. If that had broken be- 
cause of dry rot, he would have discovered it, and 
he would have reported it to the defendant, and a part 
of the rope, or the broken part, would have been saved 
as a matter of protection to the defendant. But this 
was not done." [Pr. Tr. pp. 43-44.] 

We submit that if the rope was successfully spliced 
without the removal of any part of it, this in itself was 
evidence that there was no dry rot in the part that was 
spliced, and if at the time of the trial it was in possession 
of Appellee as claimed by Appellant, it could have been 
obtained by Appellant by the use of slight diligence in dis- 
covery under Rule 34 of the Federal Rules of Civil Pro- 
cedure, or by subpoena duces tecum under Sec. 1985 
C. C. P. At least it was in Appellant's power to obtain 
possession of the rope. 



—29— 

The rule is well stated in a note to 70 A. L. R., p. 1326, 
as follows: 

"It has become a well established rule that where 
evidence which would properly be part of a case is 
within the control of the party whose interest it 
would naturally be to produce it and without satis- 
factory explanation he fails to do so, the jury may 
draw the inference that it would be unfavorable to 
him." 

Citing : 

10 R. C. L., p. 884. 
And this rule is restated in 20 Am. Jur., p. 188, Sec. 183. 

And in a very recent case it was held the production of 
weak evidence when strong is available, can lead only to 
the conclusion that the strong would have been adverse, 
and silence then becomes evidence of the most convincing 
character. 

Int. Circuit v. United States, 306 U. S. 208, S3 
L. Ed. 610, 59 S. Ct. 467. 

The case of Estate of Moore, 180 Cal. 570 at 585, also 
reported in 182 Pac. 285 (cited by App. Op. Br. p. 24, 
line 6), is a case on wilful suppression of evidence, and 
not in point. 

We have no quarrel with the rule enunciated in the 
other cases cited by Appellant, to-wit, Hiner v. Olson, 23 
Cal. App. (2d) 227, at 234, also reported in 72 Pac. (2d) 
890, on rehearing 73 Pac. (2d) 945, and the case of 
Tieman v. Red Top Cab Co., 117 Cal. App. 40 at 46, also 
reported in 3 Pac. (2d) 381, and recite them as sustaining 
our position, and it is with a feeling of charity that we call 
attention to the first sentences on pages 24-25 of Appellant's 
Opening Brief as evidently a mistake, although we agree 
with the conclusions therein stated. 



—30— 

Appellant's objections set forth under his Point IV ap- 
parently are made to that part of the Court's finding read- 
ing as follows: 

"This property had been used in the show busi- 
ness, some of it for a number of years. The ropes 
had been used for one or two years, perhaps two 
/ years. The defendant is familiar with the show busi- 
ness, and had been in such business for some time. 
He knew about the ropes, and must have known how 
long those ropes would likely continue in use. The de- 
fendant had in its employ a practical staff of efficient 
showmen, who had been engaged in the show busi- 
ness, some for many years." [Pr. Tr. p. 40, lines 
11-20.] 

And Appellant again uses the reporter's transcript (we 
renew our objection to this practice on the part of Appel- 
lant), to show by the testimony of Mr. Daillard, the "co- 
ordinator" of the Great American Circus, that he was 
an experienced theatre man but not a circus man. It 
may be conceded that neither Daillard nor Wolff were 
qualified as expert circus men, but the fact is undisputed 
that they employed a number of circus men of many 
years experience to act as their agents and managers of 
the various departments of the circus, men who were 
familiar with this particular equipment. 

Singleton, the "boss canvasman" for the Great Ameri- 
can Circus, testified in answer to a question by the Court 
as follows: 

"The Court: You say, T spliced the rope.' What 
was the condition of the rope where it separated? 
A. The rope was in usable condition. I bought 
the rope myself and had been using it. I had been 
handling this property since 1937, and had replaced 
new rope from time to time, and rebuilt seats and 
poles, and whatever was necessary. 



—31— 

The Court : Well, you have answered the question." 
[Pr. Tr. pp. 131-132.] 

And the further fact that Singleton was able himself to 
splice the broken rope so that it not only held for the 
show in Pasadena but also at Pomona the next and last 
performance, would indicate familiarity with the condi- 
tion of ropes. 

We submit that it is a fundamental and well-settled rule 
of law, that the knowledge of the agent in the course of 
his agency is the knowledge of the principal. 

1 Cal. Jur. 846, Sec. 125, Point 8; 

F aires v. Title Ins. & Trust Co., 15 Cal. App. (2d) 
350, at p. 354, 59 Pac. (2d) 428. 

"As against a principal, both principal and agent are 
deemed to have notice of whatever either has notice 
of, and ought, in good faith and the exercise of or- 
dinary care and diligence, to communicate to the 

Other." 

Sec. 2332 C. C 

Appellant's argument under his Point V is but a repeti- 
tion of the argument under Points II and IV and we feel 
that it has been answered heretofore. Most of the testi- 
mony cited by Appellant in his Point V is taken from the 
reporter's transcript. (Op, Br. pp. 45, 46, 47.) (We 
again object to the consideration of testimony not in the 
printed transcript.) Suffice it to say, that of the three 
witnesses whose testimony is referred to in the Opening 
Brief, page 45, lines 3 and 4, Guice, the trapeze artist, 
Priest, the hardware man, and Singleton, the "boss can- 
vasman" who spliced the rope in question, the Court evi- 
dently believed that Singleton knew more about the con- 
dition of this particular rope than the others. 



) 



—32— 
POINT V. 

In Answer to Appellant's Point VIII. 

The Court Had a Right to Conclude From the Admis- 
sion of Appellant That One of the Reasons for 
Closing the Show Was the Calling Out of a Num- 
ber of the Performers by the Business Agent of 
the American Federation of Actors. 

The admission of Appellant that the reason for closing 
the show was as contained in their telegram sent the last 
night of performances at Pomona, May 31st, 1939, to 
fourteen sponsors under contract with Appellant, which 
telegram reads as follows : 

"Kramer of American Federation of Actors has 
called out acts which are members of his organiza- 
tion. This and other labor difficulties which have 
caused us to miss matinee performances in Santa 
Ana and Pasadena necessitates us advising you with 
regret we will be unable to fulfill contract for Cir- 
cus performance. One of our men will contact you 
later." [Pr. Tr. p. 259, lines 4-11.] 

However, this was not the sole reason for closing the 
show. The trial court in its conclusions, gives another 
very cogent reason, to-wit: 

"Operating the show for a week at a net loss of 
$23,323.93." [Pr. Tr. p. 45, lines 10, 11, 20.] 

Nowhere in the telegram is "faulty equipment" stated as 
a reason for closing the show or missing performances. 



—33— 

The strike and other labor difficulties are given as the 
sole reasons for closing the show. 

We submit that Appellant's real objection to the con- 
clusion of the trial court is that the Court failed to find 
that a reason for closing the show was "faulty equip- 
ment", and Appellant's self-serving argument (Op. Br. 
pp. 53-54) as to its fairness and honesty in not availing 
themselves sooner of the "strike" clause in their contracts 
with sponsors [Pr. Tr. p. 254, Par. 7], is more ludicrous 
than logical. Also, their reiteration or exaggerated claims 
of faulty equipment, when their evidence at its best 
showed one wagon wheel out of 104 ran dry after the 
wagon had been pulled out of the sand, hub-deep, by cater- 
pillars in San Diego, and one rope broke when it became 
fouled and pulled on by an elephant. All of these con- 
tentions were disposed of by the Court in its finding con- 
trary to the Appellant's claims. The Court made up its 
mind from all the evidence and facts. The items com- 
plained of were infinitesimal matters in any event, when 
one considers the vast amount and mass of equipment 
carried by a big three ring circus, the quantity and nature 
of which has become an American idiom for intricacy and 
variety. 



—34— 
POINT VI. 

In Answer to Appellant's Points IX, X, XI and XII. 

The Qualifications of Expert Witnesses and the Ad- 
mission of Opinion Evidence Is a Matter Within 
the Discretion of the Trial Court, and There Can 
Be No Abuse of That Discretion Where the Trial 
Is Before the Court Without a Jury and the Court 
Only Gives the Testimony Such Weight as It 
Ought to Have. 

Appellant's objections under Points IX, X, XI and XII 
as set out in his Opening Brief, being pages 55 to 58 
inclusive, we believe can be properly considered and an- 
swered under one heading. These objections relate to the 
testimony of Paul Eagles, J. V. Austin and Pat Graham, 
on the condition and suitability of the circus equipment 
leased by Appellant. 

Paul Eagles testified as to his qualifications as an ex- 
pert on circus equipment as follows: 

"Q. During the past years of your life have you 
had any connection with circuses or a circus? A. 
Yes. 

Q. Will you relate to the court what that connec- 
tion was? A. I have been purchasing agent and 
had various jobs, and also business manager, and 
manager. 

Q. For what period of time? A. Well, over a 
period of approximately 25 years. 

Q. And for what circuses did you engage in 
those activities during that period of time ? A. Well, 
Al G. Barnes. 

Q. Relate to the court approximately what years, 
and what you did for Al G. Barnes. A. Well, I 
was purchasing agent and I was business manager. 



—35— 

Mr. Schaefer: I am sorry. I can't hear, Your 
Honor. 

The Court: Speak so that all of us can hear you. 

A. I was purchasing agent and I was business 
manager. 

Q. By Mr. Combs: And for what years, Mr. 
Eagles? A. The last year was 1938. 

Q. What was the first year? A. Oh, about 
1915 or 1914, in there. 

Q. Subsequent to 1938 what circus did you work 
for, if any? Did you say 1928 or 1938? A. 1938. 

Q. Subsequent to that year — A. Mostly with 
Al G. Barnes. 

Q. Did you ever work for the Great American 
Circus ? A. Yes. 

Q. What year? A. In 1939. 

Q. In what connection? A. Manager." [Pr. Tr. 
p. 63, line 25, to p. 64, line 31.] 

"Q. Was there anything else you did on that 
first day, that you recall? A. Got all the stuff to- 
gether and started putting it all together. 

Q. Did you lay out the tent rigging, blocks and 
falls? A. Singleton did. 

Q. Did you direct him to do it on that day? A. 
Yes. 

Q. Did you examine the poles for the circus? A. 
Yes. 

Q. All of this equipment was second-hand or used 
circus equipment, was it not? A. It was. 

Q. You knew that fact at least as early as the 
19th of May, did you not? A. Yes. 

Q. In fact you knew it prior to that time, did 
you not? A. I had it under sub-lease from No- 



—36— 

vember 1938 until around the middle of March, or 
later, possibly. 

Q. Of 1939. A. Yes, sir. 

Q. You were very familiar with all of this equip- 
ment? A. Yes, sir. 

Q. Including both what was taken by Fanchon & 
Marco for the Great American Circus and that which 
was not taken; is that correct? A. That is right." 
[Pr. Tr. p. 70, line 13, to p. 71, line 9.] 

J. V. Austin testified as to his qualifications as fol- 
lows: 

"Q. By Mr. Combs: What is your occupation, 
Mr. Austin? A. Showman. 

Q. How long have you been engaged in that busi- 
ness? A. About 40 years. 

Q. And in that connection what shows have you 
been involved with, as such showman? A. John 
Robinson's ; Hagenbeck- Wallace ; Al G. Barnes ; Sells- 
Floto; Ringling Brothers; Barnum & Bailey; and the 
Great American Circus. 

Q. What capacities did you work for those or- 
ganizations in? A. From advertising agent to 
manager. 

Q. Practically every capacity of an executive 
nature? A. Most every one. 

Q. And in that connection did you become very 
familiar with the operation and complete activities 
and functions of circuses? A. Necessarily." [Pr. 
Tr. p. 223, line 23, to p. 224, line 12.] 



—37— 

Pat Graham testified as to his qualifications as fol- 
lows: 

"What is your occupation? A. Circus employee. 

Q. How long have you been engaged in that 
capacity? A. 19 years. 

Q. What character of work did you undertake 
during that 19 years? A. All the way from cook 
house punk up to head porter. 

Q. For what circuses? A. I started on the 
John Robinson Show; Sells-Floto; Hagenbeck-Wal- 
lace; Sells Brothers; Al G. Barnes; McCullough 
Brothers. 

Q. Did you work for the Great American Cir- 
cus? A. Yes, I did." [Pr. Tr. p. 275, lines 6 to 19.] 

It will be remembered that all these witnesses were em- 
ployees of the Appellant and worked with the Great 
American Circus during its operation, and the witnesses 
Paul Eagles and Pat Graham worked on and helped select 
the equipment used under the lease by the Great American 
Circus. 

It is hard to conceive how a witness could be better 
qualified to give an expert opinion of the useability and 
condition of the circus equipment in the instant case than 
Paul Eagles. He had worked as purchasing agent, busi- 
ness manager, and manager, and in various other capaci- 
ties in the circus business, for 25 years and had been 
manager of the famous Al G. Barnes Circus for more 
than 20 years, and was the manager of the Appellant's 
circus, and had not only carefully and minutely examined 
the equipment but had selected the portions to be used by 
his employer, the Great American Circus, the appellant 
herein. These qualifications apply equally to J. V. Austin, 



—38— 

of 40 years experience, and Pat Graham, of 19 years 
experience. 

Appellant correctly states in his Opening Brief, page 57, 
lines 7 to 12, that the basis for opinion of expert testi- 
mony in California is Section 1870, Subdivision 9, C. C. P., 
and the interpretation of said section by the Supreme 
Court in the case of Vallejo v. Reed Orchard Company, 
169 Cal. 545, also reported in 170 Pac. 426. In that 
case, neither the qualifications of the expert witnesses who 
were allowed to testify, nor the qualifications of the wit- 
ness whose testimony was refused by the trial court, are 
set out in the exhaustive opinion but the rule announced 
therein has been followed by the Appellate Courts of 
California in a long line of decisions ever since. This 
rule is set out at page 575 as follows: 

"The question whether or not a witness is qualified 
to give his opinion, as evidence upon a matter in 
issue, is submitted to the trial judge in the first in- 
stance, and is to be determined by him before such 
opinion may be given. (Fairbank v. Hughson, 58 
Cal. 314.) It is, in itself, in the nature of a trial of 
a question of fact, by evidence addressed to the judge 
alone, and, as in other decisions on questions of fact 
by a trial court, his ruling thereon is a matter of dis- 
cretion and will not be overturned on appeal unless 
there was an actual want of evidence to support it or 
a clear abuse of discretion in ruling upon the evidence 
given on the subject. (Howland v. Oakland etc. Co., 
110 Cal. 521, (42 Pac. 983); Mabry v. Randolph, 7 
Cal. App. 427, (94 Pac. 403).) If there is any sub- 
stantial evidence to sustain the ruling, the exception 
thereto will be disallowed." 

Vallejo etc. v. Reed Orchard Co., 169 Cal. 545, at 
575, 170 Pac. 426. 



—39— 

The opinions of the witnesses in the instant case as to 
the condition and useability of said equipment, were in no 
way binding upon the Court, for 

"It is not mandatory that the trial court accept 
the conclusions of an expert, even though it is un- 
contradicted." 

First National Bank v. Caldwell, 84 Cal. App. 
438, at 447, Point 9, 258 Pac. 411. 

The cases cited by Appellant under Points XI and XII 
(App. Op. Br. p. 58), fully sustain the position of Appel- 
lee and the trial court's ruling. Rowland v. Oakland etc., 
110 Cal. 513, also reported in 42 Pac. 983, holds as fol- 
lows: 

"We cannot say the court abused its discretion in 
holding that the witness McCarthy had shown him- 
self sufficiently qualified to answer the hypothetical 
question, tending to elicit his opinion as to whether 
the car of appellant could, with proper care and at- 
tention, have been stopped in time to avoid the col- 
lision. This is a question largely for the determina- 
tion of the trial judge, and his ruling will not be dis- 
turbed except error clearly appears." 

Howland v. Oakland etc., 110 Cal. 513, at 521, 
42 Pac. 983. 

In Kinsey v. Pacific Mutual Life Ins. Co., 178 Cal. 
153, also reported in 172 Pac. 1098 (App. Op. Br. p. 58), 
the question of qualifications of life guards to express 
their opinion as to whether the appearance of the deceased 
was indicative of death by drowning was ruled upon by 
the trial court and the trial court refused to accept their 



—40— 

qualifications, the Supreme Court on appeal sustained the 
trial court in the following language : 

"As to whether or not they were thus qualified was 
question for the determination of the trial judge, 
and in the absence of an abuse of discretion dis- 
closed by the record, his ruling should not be dis- 
turbed." 

Kinsey v. Pacific Mutual etc., 178 Cal. 153, at 156, 
172 Pac. 1098. 

In Dobbie v. Pacific Gas & Elec, 95 Cal. App. 781, 
also reported in 273 Pac. 630 (App. Op. Br. p. 58), there 
was no question of the qualification of the witness. The 
Appellate Court in sustaining the trial court, merely held 
that the question asked did not call for "opinion evidence", 
and further said: 

"The admission or exclusion of such evidence rests 
largely within the discretion of the trial court, which 
in the present instance was not abused." 

Dobbie v. Pacific Gas & Elec, 95 Cal. App. 781, 
at 792, 273 Pac. 630. 

The language of the rulings of the trial court in the 
instant case clearly shows that the Appellant suffered no 
harm from the admission of the testimony of Paul Eagles. 

"The Court: He is giving his ideas as a man 
familiar with this sort of business, and I think it is 
proper. The Court will only give it such weight as 
it ought to have anyway." [Pr. Tr. p. 89, lines 6-9.] 

And in answer to the objection made against testimony of 
Pat Graham: 

"The Court: The Court will consider it if it has 
any value." [Pr. Tr. p. 280, lines 25-26.] 



-41— 

POINT VII. 

In Answer to Appellant's Point XIII. 

There Is No Need of a Finding on an Immaterial 
Allegation of the Complaint in Relation to Mitiga- 
tion of Damages, Where Appellant Submitted No 
Evidence in Relation Thereto and the Stipulation 
and Agreement of the Parties Confirmed by the 
Court at the Pretrial Hearing, Limited the Issues 
and Did Not Include "Mitigation of Damages" as 
an Issue. 

In answer to Appellant's Point XIII of his Opening 
Brief, we submit that the allegation of Appellee's com- 
plaint referred to, to-wit, "that plaintiff made every en- 
deavor during the remainder of the term of said contract 
to let said property to others but was unable so to do", 
is an immaterial allegation or surplusage, and its inser- 
tion is merely an anticipation of a defense. It was not 
even necessary for Appellant to deny the same, and his 
denial raised no issue nor shifted the burden of proof 
from Appellant to Appellee on a matter which Appellant 
admits that proof of "mitigation of damages" rests upon 
the defendant (Op. Br. p. 59, lines 10-12). 

Appellant's admission, however, is but a re-statement of 
the well-settled law of California that "the burden of 
showing facts in mitigation of damages rests upon the 
defendant". 

Andersen v. La Rinconada Country Club, 4 Cal. 
App. (2d) 197, at 201, Point 4, 40 Pac. (2d) 
571; 

Vitagraph, Inc. v. Liberty Theatre Co., 197 Cal. 
694, at 699, Point 2, 242 Pac. 709. 



—42— 

Where in a suit upon a contract, plaintiff alleged that 
he had performed all the conditions of the contract on his 
part to be performed and defendant denied this allegation 
and urged upon appeal that it was incumbent upon plain- 
tiff to prove the allegation, the Appellate Court said in 
affirming the decision for plaintiff: 

"In the first place, the complaint stated a complete 
cause of action without Paragraph IV, and the con- 
tract being pleaded in terms and not being set forth 
in full, Paragraph IV may be considered as sur- 
plusage, or at least an immaterial allegation which it 
is not necessary to deny. (21 Cal. Jur. 143.)" 

Easom v. General Mortgage Co., 101 Cal. App. 
186, at 190, Point 3, 281 Pac. 514. 

Appellant presented no evidence concerning mitigation 
of damages and he should not now be heard to complain, 
when the duty rested upon Appellant to have presented 
evidence of this character. 

Where an objection on appeal that the trial court failed 
to take into account matters of mitigation of damages 
when the Appellant had offered no evidence on such 
"mitigation", the Appellate Court said: 

"It does not appear from the record that any in- 
dependent evidence was presented to the trial court 
heard relative to the value of these elements. Appel- 
lant will not now be heard to complain that the court 
failed to take into account elements in mitigation of 
damages, when the duty rested upon it to have pre- 
sented evidence of this character." 

Kramer v. Associated Almond Growers, 111 Cal. 
App. 595, at p. 600, Point 5, 295 Pac. 873. 



—43— 

The cases cited by Appellant to sustain his argument 
that the burden of proof shifted from Appellant to Ap- 
pellee are warehouse or bailment cases, and in each case 
the burden was held to be with the defendant. The first 
case, Wilson v. Crown Transportation, 201 Cal. 701, also 
reported in 258 Pac. 596, was decided on the application 
and construction of Sec. 8 of the Warehouse Receipt 
Act, Statutes 1909, page 437, and that part of Sec. 8 
which reads as follows: 

"In case the warehouseman refuses or fails to de- 
liver the goods in compliance with the demand by the 
holder or depositor so accompanied, the burden shall 
be upon the warehouseman to establish the existence 
of a lawful excuse for such refusal," 

the Court saying at page 707: 

"It would be difficult to give a reasonable con- 
struction to the statute without attributing to it the 
force of placing the burden of proof for failure to 
deliver on the warehouseman." 

The other cases cited are either warehouseman or bail- 
ment cases, the rule of law being the same in either case. 

This question of "pleading", however, in the instant 

case is a moot one, for upon stipulation of the parties 

at the pretrial hearing the issue was limited as follows: 

"The issue will